Palantir Should’ve Known SPACS Were Too Good To Be True…

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What's going on?

Secretive analytics company Palantir announced a mixed set of quarterly results on Monday.

What does this mean?

On the face of it, Palantir had a good quarter: the company’s revenue grew a better-than-expected 26% last quarter from the same time last year. But dig a little deeper, and things start to come apart at the seams. First, the firm posted a surprise loss for the quarter, mainly because its investments in SPACs – the mid-pandemic fad into which it pumped more than $400 million last year – haven’t panned out. And second, its revenue outlook for this quarter fell short of estimates, which Palantir put down to the “lumpiness” and unpredictability of government contracts. But investors don’t want excuses, they want results: the firm’s share price fell 15% after the update, meaning it’s now dropped almost 50% this year.

Why should I care?

Zooming in: It should be Palantir’s moment.
Palantir’s international revenue – which makes up 40% of sales – barely grew at all last quarter, even as the firm has been trying to curry favor with European governments on the back of the Russian invasion. And sure, some of that was down to the strong dollar, which lowers the value of international sales when converted back to the US dollar. But it also suggests that Palantir’s sales approach – whether charm offensive or fear-mongering – hasn’t been working quite as well as it hoped.

The bigger picture: Palantir wants you.
Plenty of tech firms have said recently that they’re freezing hiring or cutting jobs, but not Palantir: it announced last week that it’s on track to increase headcount by about 25% by the end of the year, as it accelerates its pace of hiring to meet its ambitious sales goals. But since that’ll push its costs up even more, it remains to be seen if the extra sales will justify the investment…

Originally posted as part of the Finimize daily email.

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