Palantir earnings: Geopolitical tensions to cyber contracts?

The perhaps ill-timed move into crypto might not be enough to offset delayed government contracts for Palantir. Will the market react with more selling or focus on the fairer valuation?

----------------

Tech troubles all around

Palantir disappointed the markets after its prior earnings but has been trying to rectify the situation. Part of the problem is that a significant portion of its revenue is tied to government contracts. While this generally means more security, it also typically means less growth.

In particular, during the last quarter, there was a distinct risk of hitting the debt ceiling. One of the ways that the Treasury dealt with the problem was to postpone orders to the next quarter, which could be reflected in Palantir's Q4 earnings. But that could also mean that Q1 earnings will be better than anticipated so that the market might shrug off a less than an auspicious quarter.

As geopolitical concerns have taken on a new impetus in the Russia-Ukraine situation, there might be an increased investment into proprietary cybersecurity platforms. The market will likely be very interested in the post-earnings presser where the CEO could address that issue.

Going commercial

The company has been trying to pivot towards the private sector and announced a series of partnerships from the likes of Merck and Bigbear. However, some of the other notable contracts, like with Ferrari and Hyundai Heavy, were signed after the quarter's close. Palantir's move into crypto also took a bit of a beating last month, with a drop in prices across the board.

Palantir is expected to report EPS of $0.04 on $417.7M in revenues. But the focus might be more on guidance, as analysts' consensus is for next quarter to be better.

PLTR in a bear market

Palantir has been in a bear market since the "death cross" between the 200 and 50 day moving averages materialized last December. However, its share prices appear to have found a local bottom at $11.75.

Source: Spreadex trading platform

If PLTR continues to ascend past the $14.45 resistance, an attempt towards $17.60 (swing low of December 2021) is more likely. Markets could then look for further directional clues near the $20 barrier.

If the low of $11.75 gives way, the downward trend will likely resume. The next level of significant substructure lies at $10 per share, the price the company debuted trading during its IPO, and a solid psychological level.

Key Takeaways

Palantir's Q4 earnings report numbers might show a big drop in revenues due to the company being tied to the US government's debt ceiling. Notably, most analysts expect revenues to increase in Q1 instead.

Once the results are out, the share price might begin to reflect growth prospects amidst geopolitical tensions and a series of partnerships announced recently, especially if it is supported by the company's guidance.