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- 🗞️ Palantir Tanks 8%
🗞️ Palantir Tanks 8%
Big Moves Decoded: SPOT, NCLH, and YUM
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Palantir Falls Despite Strong Q3 Results
Palantir (PLTR) delivered blockbuster third-quarter results that exceeded Wall Street expectations, posting adjusted earnings of $0.21 per share versus the expected $0.17, on revenue of $1.18 billion compared to estimates of $1.09 billion.
The AI software giant issued stellar fourth-quarter guidance of $1.33 billion in revenue, well above the $1.19 billion analysts anticipated.
Yet paradoxically, shares tumbled 8% on Tuesday as investors confronted the company's sky-high valuation—trading at a forward P/E of 254x compared to Nvidia's 35x—and news that "Big Short" investor Michael Burry had taken a short position against the company.
CEO Alex Karp didn't mince words in his defense, calling the short positions "market manipulation" and declaring short sellers were betting against "one of the great businesses of the world."
The company's U.S. government business grew an impressive 52% year-over-year to $486 million.
In comparison, U.S. commercial revenue more than doubled to $397 million, fueled by AI-driven partnerships with Snowflake, Lumen, and Nvidia.
For the full year, Palantir raised its sales outlook to $4.4 billion, surpassing Wall Street's $4.17 billion forecast.
Source: App Economy Insights
Our Takeaway
Palantir's fundamentals remain stellar, but the market is signaling that even exceptional growth can't indefinitely justify a 254x forward P/E multiple.
When your valuation premium exceeds the world's most valuable company by more than 7x, every quarter becomes a tightrope walk where merely beating estimates isn't enough—you need to shatter them.
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Market Overview 📈
Stocks sold off sharply on Tuesday as artificial intelligence-related names came under pressure, with investors questioning whether sky-high valuations can be sustained even as profits remain strong.
The sell-off was fueled by mounting concerns about AI stock valuations, with the S&P 500's forward P/E ratio climbing above 23x—near its highest level since 2000.
Palantir, Oracle, and AMD all declined despite strong fundamentals, as investors questioned whether capital expenditure investments would translate into sufficient profit growth to justify current multiples.
Adding fuel to the fire, Goldman Sachs CEO David Solomon warned that "it's likely there'll be a 10-20% drawdown in equity markets sometime in the next 12 to 24 months," while Morgan Stanley CEO James Gorman, echoed similar concerns about potential 10-15% corrections.
Market breadth remained worryingly narrow, with more than 300 S&P 500 stocks closing in the red the previous session, underscoring concerns about tech concentration and weak participation beyond mega-cap technology names.
Further weighing on sentiment, Bank of America warned that delayed SNAP benefit payments due to the ongoing government shutdown could reduce consumer spending in November by as much as 0.5 percentage points, adding economic headwinds to valuation concerns.
Stock Moves Deciphered 📈
🚀 Expeditors International (EXPD)
Expeditors International saw its stock soar almost 11% after reporting strong third-quarter earnings and revenue that beat analyst expectations.
The company also benefited from increased brokerage demand due to tariff turmoil.
🏥 Henry Schein (HSIC)
Henry Schein's stock surged over 10% after the company reported record third-quarter financial results, surpassing both earnings and revenue estimates.
The company also raised its full-year profit guidance.
🍕 Yum! Brands (YUM)
Yum! Brands gained 7.4% after its third-quarter earnings and revenue surpassed estimates, driven by strong sales at Taco Bell and improved U.S. performance at KFC.
The company also announced it is exploring strategic options for Pizza Hut, which has struggled to compete against rivals like Domino's.
Headlines You Can't Miss 👀
📦 Amazon, UPS, Target collectively announced layoffs exceeding 60,000 roles this year, citing efforts to streamline operations and cut corporate bloat amid AI transformation.
🏦 Wells Fargo reached an all-time high, trading at prices not seen in the bank's history, dating back to 1968.
🏦 Bank of America surged to 52-week highs, trading at levels last seen in February 2007, nearly two decades ago.
🏛️ Berkshire Hathaway shares climbed 2.6% as investors sought safety during the broad market sell-off, drawn to Warren Buffett's conglomerate for stability.
☕ Starbucks announced a $4 billion joint venture with Boyu Capital to operate China locations, with Boyu taking up to 60% stake.
🧼 Kimberly-Clark was downgraded by Evercore to In Line over concerns about its $40 billion Kenvue acquisition and potential Tylenol liability risks.
🍕 Papa John's plummeted 12% after Apollo Global withdrew its $64-per-share takeover bid, citing waning consumer spending as a headwind.
🎒 Five Below was identified by Bernstein as the most likely retailer to beat third-quarter expectations, despite a bleak holiday shopping outlook overall.
Trending Stocks 📊
🚢 Norwegian Cruise Line (NCLH)
Norwegian Cruise Line shares plunged nearly 16%, marking the stock's worst day since April 3, 2025, after third-quarter revenue of $2.94 billion missed analyst expectations of $3.02 billion.
The miss sparked sympathy selling in Royal Caribbean and Carnival, which fell more than 5% and 8% respectively.
🚕 Uber (UBER)
Uber shares fell 5% in premarket trading despite beating Wall Street's third-quarter revenue expectations with a 20% jump to $11.2 billion.
CEO Dara Khosrowshahi called it the company's "strongest growth since the end of 2023," yet the market reaction remained muted.
🎵 Spotify (SPOT)
Spotify shares sank over 2% even as the music streaming service reported third-quarter earnings of 3.28 euros per share and revenue of 4.27 billion euros, crushing analyst estimates.
Total monthly active users reached 713 million, exceeding both analyst expectations and the company's own forecast of 710 million.
What’s Next?
Key market and macro news 👇
🍔 McDonald's reports Q3 earnings pre-market. Analysts expect a 3.72% YoY increase in EPS, a key indicator for the fast-food giant's performance and consumer spending trends.
⚡️ Emerson Electric announces Q3 results. A projected 9.46% YoY EPS growth will be watched, reflecting industrial demand and the manufacturing sector's health.
⛏️ Cameco reports Q3 earnings. A massive 2400% YoY expected EPS increase will draw attention to the uranium market and nuclear energy sector's prospects.
🧑💼 ADP Employment Report for October will provide a crucial look at private-sector job growth, influencing Fed policy expectations.
🧑🔬 ISM Services Index will gauge the health of the services sector, a major component of the U.S. economy.
👨🏻⚖️ The ongoing 34-day government shutdown, tying the longest in history, continues to delay key economic data, creating uncertainty for investors.
🛢️ WTI crude futures falling toward $60 a barrel could impact energy stocks and reflect concerns about global economic growth and oversupply.
💸 U.S. Treasury Yields: The 10-year Treasury yield easing to 4.09% will be watched closely, as lower yields can make stocks more attractive to investors.
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