Three of Cathie Woods’ ARK funds fell on Aug. 9 after she bought more shares of Palantir (NASDAQ:PLTR) stock.
ARK Next Generation Internet (NYSEARCA:ARKW) fell 4%, ARK Innovation (NYSEARCA:ARKK) fell 3.5%, and ARK Fintech Innovation (NYSEARCA:ARKF) fell 2%, while PLTR fell 10%. Palantir was due to open this morning at $15.45, a market capitalization of $32 billion.
ARK Funds now own 5.5 million shares of Palantir. Palantir has about 2 billion shares outstanding.
AI Hype vs. Fundamentals
PLTR stock fell after it reported net income of $28 million, 1 cent per share, on revenue of $533 million for the June quarter. Revenue was up 13% from a year ago.
The stock had exploded in value from $4.30 to almost $20 per share since May. That was based on hype over generative artificial intelligence (AI) and Palantir’s delivery of an AI-based platform to the U.S. military. But the company still projects revenue growth of just 20%.
Meanwhile, a single bullish call from Wedbush managing director Dan Ives recently sent the stock up 15% in just a few days. The company may be on the “golden track to success,” as bulls contend, but investors are paying 16 times revenue to own it.
Palantir is now offering its cloud-based software to civilian agencies and corporations. Its new artificial intelligence platform (AIP) may be getting “unprecedented interest” from customers, as the company contends, but management isn’t raising its earnings and revenue guidance.
The key number for bulls is Palantir’s customer count, which the company says rose 38% during the quarter. If that translates into faster revenue growth than anticipated, the stock will rise again. But growth peaked at nearly 50% in 2021 and has been falling since.
PLTR Stock: What Happens Next?
The ultimate value of Palantir depends not on hype but on profit. It has a lot of the former. It needs more of the latter.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
