Palantir Technologies (NYSE:PLTR) experienced a significant 12% drop in stock price following the release of its latest quarterly earnings. The company’s annual revenue guidance, projected between $2.68 billion to $2.69 billion, aligned with analyst expectations of $2.68 billion but did not fuel further investor enthusiasm. This news halted the stock’s recent 15% five-day rally.
Jefferies analyst Brent Thill commented, “Results were solid, but the focus remains on the valuation with the stock trading at 16 times 2024 revenue, the highest in our coverage, and having risen 47% year-to-date into the earnings announcement.” This pattern mirrored trends seen in other AI-related stocks this earnings season, which, despite substantial gains over the past year, generally underwhelmed investors, with the exception of Nvidia (NASDAQ:NVDA).
Citi analyst Tyler Radke acknowledged the strong performance in Palantir’s latest report, prompting him to raise his revenue and profit forecasts for the company. However, Radke maintained a Neutral rating on the stock due to its high valuation compared to other software companies.
The broader rally among meme stocks, known for their high valuations often disconnected from fundamental analysis, also saw a pause. SoundHound AI (NASDAQ:SOUN) dipped over 2% after a significant rise the day before, while GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) also experienced declines of about 6% and over 4% respectively, following recent gains.
The market’s reaction to meme stocks such as Carvana (NYSE:CVNA), which had surged over 40% since its earnings report on May 1, reflects a closely monitored trend by stock strategists. Despite a recent pullback in April, market sentiment is considered to be returning to normal levels after hitting a euphoric stage in March, as noted by Citi’s Levkovich Index.
Investor attention is now turning to Reddit (NYSE:RDDT), which is set to release its first quarterly results as a public company after the market closes, marking another significant moment for meme stock sentiment analysis.
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