Palantir Shares Tumble 12% as Soaring Valuation Overshadows Revenue Beat

$Palantir Technologies Inc.(PLTR)$   shares tumbled more than 12% Tuesday, on course for their worst slump in a year, as the increase in full year guidance and its better-than-expected first quarter financial results failed to quell investor concerns over the company's high valuation. 

Even with today's slump, the stock is still up almost 321% over the past year, taking the share price to about 185 times forward earnings. That’s pricier than $NVIDIA Corp(NVDA)$  's 25.3 times and the tech-heavy $NASDAQ 100 Index (.NDX.US)$'s 25.7 times. 

The company raised its revenue outlook for 2025 to a range of $3.89 billion to $3.9 billion. That's up from its previous outlook of $3.74 billion to $3.76 billion and surpassed the average analyst estimate of $3.75 billion, according to estimates compiled by Bloomberg. 

While Jefferies acknowledged that fundamentals "are clearly alive," the analysts were quoted by Bloomberg as saying that the company's valuation of 56X 2026 revenue was "irrational" and skews the risk/reward negatively. 

Palantir also boosted its guidance for U.S. commercial revenue to more than $1.178 billion, a growth of at least 68%.

 "Though Palantir raised its US Commercial segment growth expectations to 68%, upward revisions will likely be muted from the other two-thirds of the business amid limited traction in its International division," Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz wrote in a note yesterday after the financial results were released. 

In the first quarter that ended March 31, the company's revenue jumped 39% to $883.9 million, beating estimates that called for $862.9 million, according to Bloomberg consensus. Adjusted earnings reached 13 cents, in line with expectations.

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