Daily Brief: Palantir’s Getting Pummeled By Inflation Expectations, So Thank Goodness For Bitcoin

Daily Brief: Palantir’s Getting Pummeled By Inflation Expectations, So Thank Goodness For Bitcoin

almost 3 years ago3 mins

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Software firm Palantir reported quarterly earnings that met analysts’ expectations on Tuesday, and ambivalent investors shrugged off the – wait, what was that about bitcoin?

What does this mean?

Palantir – which makes analytics tools for major corporations and the defense industry – saw its revenue grow 49% compared to the same time last year, beating both the company’s own forecasts and analysts’ expectations. But ballooning costs – salaries, mainly – kept its profit from doing the same, and investors were feeling pretty lukewarm about the whole thing.

Palantir revenue
Source: Palantir

That is, until Palantir mentioned the magic word in its conference call: the firm’s decided to accept payment in bitcoin, and it’s even thinking of buying the OG cryptocurrency to bolster its own balance sheet. That might’ve done the trick: investors initially sent its shares 5% higher.

Why should I care?

For markets: Palantir’s focused on quality, not quantity.

One of investors’ biggest worries about Palantir is its dependence on a small number of big contracts. Lose one, and it’ll massively dent its profitability. But the company had some good news on that front: it added 11 new customers last quarter, bringing the total to 149. Those new additions might also be why the company’s forecasting 5% more sales this quarter than analysts were anticipating.

The bigger picture: Big Tech will be the first to go.

Palantir’s shares actually fell to their lowest level so far this year at the start of the week, in what was part of a wider pattern: the Nasdaq index – heavy on Big Tech names – is down around 5% this month. That’s mostly down to a key measure of US inflation expectations, which hit heights not seen since 2006 earlier this week. After all, if prices rise too high, too fast, the US Federal Reserve is more likely to step in and boost interest rates to slow down the climb, which would make riskier stocks – tech stocks like Palantir among them – suddenly look more expensive.

Nearly negative

Keep reading for our next story...

Gaming Platform Roblox Posted Strong Earnings

Roblox image

You might want to double-check your bank statement if you have kids, because Roblox posted strong quarterly earnings earlier this week on the back of a lot of in-game purchases…

What does this mean?

Roblox is every preteen’s go-to at the best of times, but it becomes a must-have when the real world is in lockdown. That’ll be why the number of daily active users surged almost 80% last quarter compared to the same time last year, and why they played almost 10 billion hours on the platform overall.

Plenty of users is all well and good, but investors are more interested in how successfully Roblox is monetizing them. Pretty successfully, it turns out: the amount of virtual currency – which users buy using, y’know, real currencies – grew by a better-than-expected 46%, and investors sent the company’s shares 6% higher.

Roblox stock
Source: Google Finance

Why should I care?

For markets: Kids are hooked.

With the world opening back up again, investors might’ve been nervous that kids would start losing interest in the game. Roblox certainly was, acknowledging in March that hours spent on the platform could drop by as much as 11% this quarter. But the Ro-pioid addiction might well and truly have set in: even in less-restricted April, daily active users were up 37% compared to the same time last year.

The bigger picture: This is a pause, not a game over.

Despite impressive earnings from Roblox this week and Activision Blizzard last, a new report suggests revenue in the global gaming market will actually drop off this year. But that’s probably just down to last year’s lockdown-driven boom, which saw revenue in the market grow by 23% compared to 2019. Things are expected to pick up again imminently, with the industry expected to grow 16% over the next two years. That’ll mostly be driven by mobile gaming, but console games are expected to play their part too – especially when gamers are finally able to get their hands on long-delayed consoles.

Global games market forecast
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