Key Takeaways
- Palantir shares fell 1.7% on Nov. 3, after dropping as much as 7.3% early, even though third-quarter revenue rose 96% to $2.31 billion and the company raised its full-year revenue outlook to about $8.53 billion.
- The selloff looks justified: at Palantir’s valuation, investors are paying for the contracts it signs next, and new contracts slowed sharply.
- Total contract value grew 6% from a year earlier, down from 49% growth in the second quarter, and Palantir blamed part of the slowdown on shorter contracts.
- Palantir’s 2027 guidance, expected in early February, is the next test of whether slower bookings are starting to slow revenue.
Palantir Technologies (PLTR) beat Wall Street’s estimates, raised its outlook and posted its first $2 billion quarter. The stock fell anyway: it dropped as much as 7.3% early on Tuesday, Nov. 3, and closed down 1.7% at $175.40.
Before the report, NYU Stern professor Scott Galloway was asked for his predictions for the week ahead on Monday’s episode of Prof G Markets. His call: “Palantir beats and the stock falls.”
His reason was the price: “Anything short of a blowout is a sell on this thing at this price.”
Score one for Galloway, even if buyers clawed back most of the drop by the close.
Palantir Did Its Part
Third-quarter revenue rose 96% from a year earlier to $2.31 billion, well ahead of the $2.18 billion analysts expected. U.S. commercial revenue grew 148% to $984 million and passed U.S. government revenue for the first time.
Palantir also raised its full-year revenue outlook to $8.530-$8.534 billion. That’s about $380 million more than it guided in August. Going into the report, analysts already expected several more years of fast growth:
The new outlook beats the $8.22 billion 2026 estimate by about $310 million, so those estimates should go up from here. JPMorgan, which rates the stock Overweight with a $262 target, called it a “beat and raise” quarter.
New Contracts Slowed Sharply
Revenue has gone up every quarter for the last three years:
The third quarter’s $2.31 billion kept that going.
New business looked different. Palantir closed $2.92 billion of total contract value in the quarter, up 6% from a year earlier, after 49% growth in the second quarter. U.S. commercial deals came to $1.46 billion, up 11%. The quarter before, they hit a record $2.13 billion, up 153%. And U.S. commercial remaining deal value grew just 4% from June 30, after growing 27% in the second quarter.
Revenue guidance doesn’t show that slowdown yet. The fourth-quarter guide of $2.649-$2.653 billion implies about 15% growth from the third quarter, faster than the roughly 12% Palantir guided to for the third quarter before it delivered 20%.
Palantir put some of the bookings slowdown down to shorter contracts, Goldman Sachs analysts noted. That’s the generous reading: a shorter contract books less total value up front, even when the customer spends just as much each year.
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Galloway Got Palantir’s Price Right
Palantir traded at 94x forward earnings at Monday’s close:
That’s well below its three-year average of 130x and its 270x peak on Oct. 31, 2025. But at 94x, investors are paying for Palantir’s growth in 2027 and 2028, and that growth depends on the contracts it signs now. So a quarter with 6% bookings growth can outweigh one with 96% revenue growth.
I’m with the sellers for now. Shorter deals may explain part of the slowdown, but U.S. commercial deal value growing 4% from the prior quarter is a sharp drop from 27%. At this price, I’d want to see bookings recover before buying.
What Palantir’s February Guide Will Settle
A beat and a raise weren’t enough at 94x, just as Galloway said. One quarter’s bookings can swing on the timing of a few big deals, though. Palantir’s 2027 guidance, expected in early February, will show one of two things: either analysts’ $12.4 billion for 2027 is too low, or slower bookings are starting to slow revenue.
So what is Palantir stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
