Shares of data mining and analytics company Palantir (NYSE:PLTR) jumped 5.1% in afternoon trading after the shock announcement that OpenAI CEO Sam Altman was leaving the company. According to the Council, Altman’s departure “follows a deliberative review process conducted by the Council, which concluded that he had not always been candid in his communications with the Council, which hampered his ability to exercise its responsibilities. The Board no longer has confidence in his ability to continue to lead OpenAI. As a result, president and co-founder Greg Brockman announced that he was leaving OpenAI. Subsequently, Microsoft CEO Satya Nadella revealed that Altman and his former OpenAI co-founder Greg Brockman were joining Microsoft to lead a new advanced AI research team. The move demonstrates Microsoft’s commitment to dominate the rapidly growing AI market. Combining Altman and Brockman’s expertise with Microsoft’s vast resources could create a formidable force in the AI field. This development shows that AI platforms could be potential acquisition targets for large technology and internet companies looking to quickly add AI capabilities and talent. After the initial rebound, shares cooled to $21.51, up 4.9% from the previous close.
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What does the market tell us:
Palantir shares are very volatile and over the past year have seen 48 moves greater than 5%. In this context, today’s development indicates that the market considers this news significant, but not as something that would fundamentally change its perception of the company.
The previous big move we talked about happened 18 days ago, when the stock gained 5.7% following the news that the company reported an impressive “beat and raise” quarter. Third-quarter results beat revenue and EPS estimates. Additionally, gross margin improved and the company continued to generate positive free cash flow. Looking ahead, the company raised its full-year guidance for revenue and adjusted operating profit, which beat Wall Street expectations. Revenue guidance for the next quarter was in line with expectations. Finally, management noted that Palantir is now eligible for inclusion in the S&P 500. The S&P 500 is a widely followed index that tracks the performance of the 500 largest companies in the United States. Being included in the index means Palantir will likely be held by many mutual funds and ETFs, which could potentially boost demand for the stock. Zooming out, we think this was a decent quarter, showing the company remains on target.
Palantir is up 236% year to date. Investors who purchased $1,000 worth of Palantir stock during the IPO in September 2020 would now see an investment worth $2,260.
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