Not good enough. (I sold)
AuthorHiggo van Biljon
I sold majority of my Palantir shares. Here is why.
- Palantir posted their Q2 earnings on Monday.
- Palantir was a top tier holding in my portfolio
- I sold majority of my shares.
- What I will be doing with my funds
- Earnings per share: Loss of 1 cent vs. earnings of 3 cents expected.
- Revenue: $473 million vs. $471.3 million expected.
Palantir's revenue for the quarter increased 26% year over year, and its commercial revenue grew 46%. The commercial customer count increased 250% year over year, growing from 34 customers to 119.
- Guidance: Palantir expects to report revenue between $474 million and $475 million for its third quarter, and between $1.9 billion and $1.902 billion for the full year.
"The strength and momentum we are seeing with our customers in the United States is a reflection of the refinement and maturation of our software platforms, which we believe will continue leading to increasingly broad adoption across sectors," - Alex Karp
Why I sold:
I still believe that Palantir has an amazing product in an amazing market, but I am dissapointed and believe there are better opportunities elsewhere.
Palantir guided for 30%+ annual growth for the next 5 years a few quarters back, it is all ready below that. This is not a good sign.
On the bright side, they are experiencing massive growth in their commercial side of the business. This is why I am not selling everything.
So in summary:
- The guidance is a bit weak for my liking.
- Complex and difficult to understand
- Better opportunity elsewhere
- Slower growth that expected
- I still own a little bit
What I plan to do with the funds:
There are many quality software companies out there. Most of them are still unprofitable.
I recently bought quite a few of them, MongoDB, Crowdstrike, Cloudflare and a few more.
BUT, for now, I am sitting on CASH.
We saw a massive rally in recent weeks in software and high growth stocks. Some say it is a bear market rally, some say the bottom is already in.
Well, either way it is not certain.
I am happy to sit and  see how things play out over the next few weeks. There are a few companies in ky watchlist. (I really like MongoDB, just waiting for their earnings before I add more.)
Palantir still has long term potential. It will probably be worth more than it is now in 5 years time. That is why I still own some Palantir shares. But, I sold majority because I feel there is better long term opportunity elsewhere.
When I buy new shares, I will share it here on the FinMeUp with my reasoning and research.