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Not good enough. (I sold)

June 19, 2024
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I sold majority of my Palantir shares. Here is why.

KEY NOTES:

  • 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
  • Conclusion

Earnings Highlights:

  • 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.)

Conclusion

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.

Invest safely!


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