Palantir Just Grew 93%. That Is The Easy Part.

Palantir closed up about 30% on Tuesday, its best single day in two years, and short sellers are reported to have lost roughly 3 billion dollars on paper in one session. So today we are going to talk about what actually happened in the numbers, and then about the harder question, which is what you are being asked to pay for it.

What the quarter actually said

Second quarter revenue came in at 1.94 billion dollars, up 93% year on year, against a consensus closer to 1.81 billion. Adjusted earnings per share were 0.41 dollars where the street sat around 0.34 to 0.35. The line that did the damage to the bears was US commercial revenue, up 149%. US government revenue was 809 million dollars. Management then raised full year guidance to roughly 8.15 billion dollars, which implies about 82% growth, and guided the third quarter to 2.16 billion against expectations nearer 2 billion.

Take a moment with that. A company at this revenue base accelerating rather than decelerating is genuinely rare. Most software businesses see growth rates decay as the numbers get bigger. Palantir's did not. That is not a narrative, that is arithmetic, and it deserves to be acknowledged before anyone starts arguing about the multiple.

Why the bull case is stronger than it was

The common criticism of Palantir for years was that it was a government contractor wearing a software costume. Lumpy, politically exposed, hard to scale. The 149% US commercial number is the direct rebuttal. Commercial customers do not sign because of a defence budget cycle. They sign because something works, or because their competitor signed.

The second point is that this is a profitable company. That matters more than usual right now. Across this earnings season we have watched the market punish companies that beat on revenue and then disclosed enormous capital spending. Palantir is not asking shareholders to fund a multi year infrastructure build before the returns show up. It generates cash today.

Why the bear case does not go away

On the other hand, none of the above tells you what the business is worth. Growth and value are related but they are not the same thing, and conflating them is one of the most reliable ways retail investors get hurt.

Here is the uncomfortable arithmetic. If the company does roughly 8.15 billion dollars this year, and growth halves from 82% to a still excellent 40% next year, you are looking at something near 11.4 billion. The question is not whether that is a good business. It obviously is. The question is what multiple of that you paid, and whether the multiple you paid already assumes several more years of the same.

There is also the specific risk that a 30% single day move creates on its own. When a stock gaps that far in one session, a meaningful share of the buyers are momentum flows and short covering rather than long term holders. Those are not sticky. The 3 billion dollars of short losses is a fun statistic, but it also means a chunk of Tuesday's demand was forced rather than chosen, and forced demand does not repeat.

What the evidence does not settle

I want to be honest about the limits here. I cannot tell you whether the multiple is wrong, and neither can anyone posting a price target this week. Valuation for a company growing this fast is extremely sensitive to assumptions three and four years out, and small changes in those assumptions produce very large changes in fair value. Anyone presenting you with a precise number is showing you the output of their assumptions, not a fact about the world.

What history does suggest, fairly consistently, is that buying an exceptional business immediately after a 30% single day repricing has produced worse forward returns than buying the same business during a quiet period. That is a statement about entry timing, not about quality.

A practical way to hold both ideas

If you already own it, the business just validated your thesis and the stock just took several quarters of good news forward. Those are both true. Trimming into strength is not a bearish act, it is a position sizing act.

If you do not own it and you want to, the thing to avoid is buying because it moved. Decide what growth rate you are underwriting for the next three years, work out what you would pay for that, and then see whether the current price is inside your number. If it is not, that is fine. Missing a good company at a bad price is a survivable outcome. The other version is less survivable.

Whether Palantir is right for you depends on how much of the future you need priced in before you are comfortable. Just be clear with yourself about which of the two questions you are answering. The company answered its question on Tuesday. The price question is still yours.