Jim Cramer Says Palantir Stock "Needs to Cool off in Order to Grow into Its Market Capitalization"

Palantir Technologies Inc. (NASDAQ:PLTR) is one of the latest stocks on Jim Cramer’s radar. Cramer explained why the stock pulled back after earnings, as he commented:

“No stock in the entire world epitomizes the straddle between the first world of technology and the third world of speculation more than Palantir, which reported earnings last night, only have to see its stock plunge almost 8% today. It was a truly bruising session, but after a magnificent run… It’s an incredibly lucrative, amazingly fast-growing business as measured by gross margins, which are huge, and the revenue growth, which is insanely fast… Wall Street professionals use something called the Rule of 40…

But Palantir, last night, Palantir reported 63% revenue growth and 51% adjusted operating margin. That is an unheard-of combination, people. Magnificent. Forget the Rule of 40. These guys passed the Rule of 100. I’ve never seen anything like it. And the company’s right to be really proud of these numbers… Palantir last night was selling at well over 300 times earnings, even higher than Tesla. That’s a little nosebleed…

Palantir is nearly 4 billion in revenue, yet it was valued at almost 500 billion heading into the quarter. That’s right, a company of 4 billion in profitable revenues is worth 500 billion… Last night, when Palantir reported, the stock looked like it could go either way. But upon further review, the market decided it was all too much, and Palantir’s stock had to go lower. Alex Karp, the fiery CEO of Palantir, was miffed about the direction of the stock. Suggested that the same people who have been betting against him will prove to be wrong again. That might be, but I think it’s reasonable to consider that there could be nothing wrong here at all. The stock just needs to cool off in order to grow into its market capitalization. That’s how I look at it.”

Palantir Technologies Inc. (NASDAQ:PLTR) develops data analytics and AI software platforms, including Gotham, Foundry, Apollo, and Palantir Artificial Intelligence Platform, that help organizations integrate, analyze, and act on complex data.

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Disclosure: None. This article is originally published at Insider Monkey.