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Earnings Highlights From Palantir, Lucid, and Disney

Plus500 | Tuesday 07 May 2024

As we move further into the spring of 2024, key firms’ earnings releases are continuing to shake the markets. Disney is set to reveal to the public how it fared over the most recent quarter on May 7th, following reports from Palantir and Lucid on May 6th. Let’s jump in:

Earnings Highlights From Palantir, Lucid, and Disney

Palantir Plugs In

Palantir Technologies (PLTR), a key player in the artificial intelligence (AI) space, beat Q1 2024 sales expectations as well as pushed estimates for next quarter's figures upwards on Monday, May 6th. According to market analysts, this result was fueled by robust demand for the firm's services, particularly those related to AI application implementation. Following Palantir's earnings release, traders pushed its share price up by 8.1% before the ring of the closing bell.

The company stands out as a beneficiary of the burgeoning generative AI trend, owing to its advanced AI platform. This platform facilitates code testing and debugging, alongside assessing various AI-related scenarios, among other functionalities.

Ryan Taylor, the chief revenue officer, emphasised the pivotal role of Palantir's AI platform in driving business growth. Notably, businesses are swiftly sealing substantial deals following participation in Palantir's AI boot camps, which grant access to the platform for up to five days. These boot camps have significantly bolstered customer acquisition rates.

In the first quarter alone, Palantir conducted hundreds of boot camps and finalised more than $87 million in deals, contributing to an over 40% increase in its customer base. Although specific conversion figures from the boot camps were not disclosed, the company's revenue trajectory is on an incline.

Co-founded by billionaire Peter Thiel, Palantir has recently raised its 2024 revenue forecast midpoint to $2.68 billion, reflecting an upward revision from its previous projection. While historically aligned with governmental contracts, Palantir is strategically diversifying its revenue streams to mitigate reliance on public sector expenditure.

With a notable uptick in commercial revenue, particularly in the U.S. segment, Palantir's financial outlook seems promising at the moment. Its first-quarter revenue of $634.3 million, coupled with its most substantial quarterly profit to date, underscores its market resilience and growth trajectory in the evolving landscape of data analytics and AI deployment. However, given the relatively new nature of the AI field, how Palantir's trajectory will play out going forward is far from certain. (Source: Yahoo Finance)

EV Maker Elucidates Results

Lucid (LCID), the California electric vehicle (EV) manufacturer, unveiled a mixed bag of first-quarter results, overshadowed by higher-than-expected losses. Revenue for the quarter stood at $172.7 million, surpassing forecasts by approximately $22.6 million and showing a nearly 16% increase compared to the previous year. However, Lucid's loss per share was higher than anticipated, at $0.30 instead of the estimated $0.25, with an adjusted EBITDA loss of $598.4 million, exceeding analysts' predictions of $505.1 million. Lucid shares have fallen by 26% in value so far this year, and how traders will react to these latest figures in the trading days ahead is as yet unknown.

CEO Peter Rawlinson expressed confidence in the company's trajectory, citing growing sales momentum and unwavering cost focus. He reaffirmed the Gravity SUV's timeline for a "late 2024" launch and outlined plans for a midsize vehicle set to debut in late 2026. 

Lucid's recent production figures, with 1,728 vehicles manufactured and 1,967 delivered, offered a silver lining for investors, signaling an upward trend from the previous quarter. The company aims to produce 9,000 vehicles in 2024, building upon last year's output of 8,428 units.

Lucid's decision to reduce EV prices in February likely contributed to increased sales, although concerns lingered regarding its impact on profit margins. Interim CFO Gagan Dhingra highlighted initiatives to optimise costs, including collaboration with suppliers to reduce expenses.

Investors may still be wary regarding Lucid's capital expenses, particularly related to Gravity production activities, which amounted to $198.2 million for the quarter. However, Rawlinson expressed confidence that these investments would yield long-term benefits, emphasising the importance of scale in mitigating fixed costs.

With $4.62 billion in cash and cash equivalents on hand, Lucid assured stakeholders of sufficient liquidity until the second quarter of 2025. Whether these and other factors will lead to a better result next quarter remains to be seen.

Is the Magic Kingdom Still Sparkling?

Venerable entertainment giant Disney (DIS) is poised to unveil its fiscal second-quarter earnings on May 7th before the ring of the opening bell. Following CEO Bob Iger's reorganisation of the company into three core segments—Disney Entertainment, Experiences, and Sports—investors anticipate insights into Disney's performance amid ongoing industry challenges. Despite facing hurdles such as falling television viewership, an uphill climb on park profitability, and streaming issues, Disney has recently made strategic changes that may renew the firm’s magic in the eyes of investors and traders alike.

Expectations are for total revenue to come in at $22.10 billion, compared to $21.82 billion in Q2 2023, and adjusted earnings per share of $1.10, up from $0.93 in Q2 2023. Additionally, Disney+ subscribers are projected to reach 4.71 million, a notable increase from a loss of 4 million in Q2 2023.

Disney's stock has surged nearly 20% since the top of the year. Improved financials, coupled with strategic announcements surrounding cost cuts and membership price hikes made in February, may have formed the proximate cause behind this bullish sentiment. Key announcements included a dividend hike, a new share repurchase program, confirmation of meeting or surpassing a $7.5 billion annualised savings target by fiscal 2024's end, a $1.5 billion investment in Epic Games, and ventures into sports streaming, including a partnership with Fox and Warner Bros. Discovery. Additionally, Disney is developing a separate sports streaming platform for ESPN, slated to launch in fall 2025.

Despite these advancements, analysts remain cautious, anticipating limited groundbreaking news in the upcoming report. However, expectations of subscriber growth, particularly with Charter cable subscribers receiving complimentary Disney+ subscriptions, are anticipated to buoy Disney's streaming business. Disney aims to add 5.5 million to 6 million core Disney+ users in Q2, with positive momentum in average revenue per user expected to continue. The company projects its streaming arm to turn profitable by Q4. Whether today’s results will measure up to expectations, and how the markets will react, could be set to make waves going forward.

Conclusion

As earnings season unfolds, the steps of various market sectors are being elucidated to the public amid various economic tailwinds and volatility. As always, earnings reports may bring surprises, both good and bad, and market watchers will have to keep their eyes peeled for new developments.


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