Midweek Deep Dive: 🚨 Down 8% in a Day - Did Wall Street Just Misread Palantir?

🌞 Good Morning, Folks!

🚨 Palantir crushed earnings. Revenue up 39%. Margins at 44%. Raised guidance.

So why did the stock tank 8%?

The answer has nothing to do with performance — and everything to do with misplaced hype.

And that disconnect? That’s where the edge begins.

This week, I’m unpacking the truth behind Palantir’s post-earnings pullback — and why this isn’t a collapse. It’s a setup.

Let’s get into it. 👇

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🔍 This Week’s Focus: Palantir’s Post-Earnings Pullback — Signal or Noise?

Palantir just crushed expectations — again. Q1 revenue surged 39% YoY to $884 million, U.S. commercial sales soared 71%, and the company raised full-year guidance. Adjusted operating margin? 44%. Cash from operations? $310 million. Free cash flow? A cool $370 million.

And yet — the stock dropped over 8% after earnings.

This isn’t a momentum collapse. It’s a reset of expectations. And that’s exactly the kind of setup I watch like a hawk.

This isn’t about price action. It’s about positioning before the next leg up. Because when retail walks away, conviction gets cheaper.

🧠 Why It Matters Now

Palantir’s Q1 2025 performance wasn’t just solid — it was structurally strong:

• Revenue: $884 million (+39% YoY)

• Adjusted EPS: $0.13 (in line with consensus)

• U.S. Commercial Revenue: +71% YoY

• Raised FY25 Revenue Guidance: $3.89B–$3.90B (above Street at $3.75B)

• Adjusted Operating Margin: 44%

• Free Cash Flow: $370 million

🧠 Why It Dropped Anyway

• Valuation Friction: Forward P/S near 17x

• Overbought Setup: +60% YTD pre-earnings

• No Surprise Beat: Expectations were sky-high — and just matching isn’t enough in this market

📌 Translation: The stock wasn’t punished for weak results — it was punished for not being perfect.

And here’s the setup I see:

• PLTR just delivered textbook execution

• Institutions are holding — retail is trimming

• The narrative hasn’t changed — the price just reset

That’s the kind of dislocation I love.

📊 Valuation & Positioning

Let’s get specific:

• Forward P/S: ~17.2x — rich, but now corrected ~9% from highs

• Enterprise Value/EBITDA: ~51x — still growth-heavy, but backed by margins

• PEG Ratio: 1.1 — near fair value for a 35%+ grower

• Adjusted Operating Margin: 44% — most SaaS peers dream of this

• Cash Position: $3.9B — zero debt

Yes, it’s expensive. But it’s also elite. And right now? You’re getting it at a 10% discount.

Palantir is still one of the most defensible, profitable, and government-embedded AI platforms in the world. And while others shout about GenAI, Palantir is actually deploying it — with real customers, real budgets, and real ROI.

This is the kind of business that just gets stronger when rates stay high and hype cools down.

🔍 The 10-Point Clarity Screener

🧠 Score: 10/10 Clarity

💡 What the Crowd Is Missing

Everyone’s watching Nvidia, OpenAI, and Microsoft.

But Palantir isn’t chasing headlines — it’s locking down contracts.

• Commercial growth is compounding

• Gov’t deals are sticky

• Margins are scaling — without leverage or fluff

📉 The dip? It’s a gift. One retail is too emotional to recognize.

While the crowd flinched, Palantir quietly positioned itself for a record FY25. And if you wait for another explosive print before buying back in, you’ll be late again.

Conviction setups don’t look obvious in real time. That’s what makes them profitable.

🔭 What I’m Watching Next

• New commercial wins in Q2 — especially in healthcare, finance, and manufacturing

• AI Platform (AIP) adoption rate — will commercial match gov’t traction?

• Watch for a stealth re-rating if EPS ticks above $0.15 next quarter

This isn’t just an AI story. It’s a story of cash, control, and compounding advantage. And this week? You get it at a markdown.

Most missed this setup last quarter. I’m not making that mistake again.

👉 Missed last week's midweek deep dive?

I unpacked Amazon’s surprise -23% slide and why the setup now looks better than ever.

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🌐 From Around the Web

• Shale Giant Diamondback Sounds Alarm: U.S. Oil Output Has Peaked, and OPEC’s Price War Is Here

  Diamondback Energy, a major U.S. shale player, just slashed capital spending and declared the end of U.S. oil production growth, citing OPEC’s aggressive pricing strategy. This contrarian signal—missed by most—could spike energy prices and crush overleveraged producers, while savvy investors reposition for a supply-constrained market.

• Trump’s Tariff Threats on Foreign Films Are Toothless—Here’s Why Investors Should Care 

  Why It Matters: President Trump’s push for tariffs on foreign films is grabbing headlines, but legal barriers make it a non-starter, signaling broader limits on his trade agenda. This underappreciated reality could cool overheated expectations for protectionist policies, leaving investors exposed to mispriced media and trade-sensitive stocks—recalibrate before the market does.

• Buffett’s $174B Stock Dump Screams Overvaluation—Are You Ready for What’s Next?

  Warren Buffett’s Berkshire Hathaway has been a net seller of stocks for 10 straight quarters, offloading $174 billion while sitting on a record $344 billion cash pile. This isn’t just caution—it’s a neon warning sign that valuations are stretched, with the S&P 500’s CAPE ratio at 30, a level historically tied to weak returns. Investors ignoring this signal risk being caught flat-footed in a correction.

📤 Catch Up on Monday’s Newsletter

Buffett just set the stage for his final chapter — and almost no one noticed.
While the media focused on AI and rate cuts, I broke down what his exit means for markets — and the generational shift most investors are missing.

🧠 Final Word

It’s easy to get shaken by price — especially when the story doesn’t shift.

Palantir didn’t stumble. It stabilized. And in a market that punishes anything short of perfection, that alone is a signal.

Conviction setups rarely feel good in real time. But that’s exactly why they pay.

📌 This week, clarity meant seeing through the selloff — and staying focused on what actually compounds.

The crowd chases confidence.

I stay where the edge whispers.

🟢 Palantir is whispering louder than ever.

Want more signal and less noise in your investing?
The Pragmatic Investor delivers clear setups, smarter positioning, and deep dives that keep you ahead — no hype, no distractions.