The Market Is Ahead Of Itself; PLTR Earnings Monday
The market has recouped all of its losses suffered in the wake of Liberation Day. It looks like a V-bottom but I’m skeptical for a couple of reasons. One, there is still tremendous uncertainty about the outcome of the trade war. Until that overhang is lifted, it’s hard for me to justify a market that’s off to the races. Two, the market was already selling off before Liberation Day. I think that’s because it was starting to price in an economic slowdown. Investors seem to have forgotten that fact as well.
Palantir (PLTR) is back at all time highs after an almost 50% correction and reports earnings Monday afternoon. It’s worth remembering that it was comments by PLTR CEO Alex Karp that were the catalyst for the market top on February 19 (“A Correction Is Upon Us”, Top Gun Financial, February 21). With a market cap over $300 billion and a rabid retail investment following, PLTR is an important stock.
While I don’t understand the business, the fundamentals are stellar. The problem is valuation. PLTR trades at 84x the midpoint of its 2025 Revenue Guidance. Not 84x EPS. 84x Revenue. “The valuation doesn’t make any sense,” Jefferies analyst Brent Thill told Barron’s [SUBSCRIPTION REQUIRED]. I wonder if their earnings report Monday afternoon could catalyze a correction in a market on the verge of overheating.
