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Palantir share price in consolidation ahead of Q2 earnings

Palantir’s share price has fallen by close to 30% over the past six months. Can its upcoming results lift sentiments?

When does Palantir report earnings?

Palantir Technologies Inc is set to release its Q2 financial results on 12 August, before market opens.

Palantir earnings – What to expect

Palantir’s businesses have largely revolved around government contracts, with this segment accounting for close to 61% of total revenue as of Q1 2021 while commercial contracts take up the remaining 39%. In its upcoming results, it may have to continue to rely on its government segment to underpin its growth, which has been growing at a faster pace compared to commercial over the past three years. For its previous quarter, its total government growth grew 76% quarter-on-quarter, towering above the commercial growth of 19%.

That said, its recent launch of Foundry for Builders marks an ongoing step to boost its commercial side of things, supporting early-stage companies under a subscription model. While any impact may not be reflected in the upcoming results, any positive development on that front may bolster investors’ confidence on its shift towards diversifying from government projects.

With its quarter-on-quarter revenue growth slowing over the past two quarters, its upcoming results may have to convince investors of its sales momentum ahead. Its huge amount of losses may also be of concern. After its losses declined in Q1 2021 from the previous quarter, investors will be watching if losses can decline further in the upcoming results.

*Q3 2020: excludes IPO expenses

Based on Refinitiv estimates, Palantir’s revenue for the upcoming quarter is expected to come in at US$352 million, an increase of 3.2% from the previous quarter, while earnings per share (EPS) is expected to register lower losses of three cents per share, compared to the loss of seven cents per share during the previous quarter.

Currently, the stock has two ‘buy’ recommendations, four ‘holds’ and three ‘sells’. The Bloomberg 12-month consensus target price of US$21.29 suggests a potential 3.7% downside from the price at the time of writing.

Palantir shares – technical analysis

From its technicals, Palantir’s share price is currently hovering around a key support level at US$21.00, where an upward trendline connecting higher lows seems to coincide with a horizontal support level. The flatlining of the MACD indicator suggests a ranging market for now, as prices are largely in consolidation ahead of the upcoming earnings release. Near-term, a downward trendline connecting lower highs seems to be serving as resistance to overcome. With that, the upcoming earnings may be closely watched as a key catalyst to induce a price break on either direction.

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