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Adobe earnings preview: Can AI monetization win back market confidence?
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140x P/E: Palantir Jumps 12% After Earnings — Too Expensive to Buy? Try This Options Setup

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ImSteven joined discussion · Feb 3 03:00
Palantir delivered a very strong Q4 earnings: quarterly revenue reached $1.4068 billion, up 70% YoY. Q4 GAAP net income came in at $609 million, adjusted EPS was $0.25, and adjusted free cash flow reached $791 million. On the demand/visibility side, the company disclosed that Q4 TCV (Total Contract Value) hit a record $4.262 billion, and U.S. commercial RDV (Remaining Deal Value) continued to grow rapidly.
For the full year, FY2025 revenue was $4.4754 billion (up 56% YoY), with adjusted EPS of $0.75 and adjusted free cash flow of $2.270 billion.
More importantly, management’s 2026 outlook came in far above expectations: they guided full-year 2026 revenue to $7.182–$7.198 billion (implying +61% YoY growth). They also projected adjusted operating income of $4.126–$4.142 billion and adjusted free cash flow of $3.925–$4.125 billion for 2026.
Driven by this significant beat and upbeat guidance, the stock surged after the report—peaking at more than +12% in over-night trading—reversing the prior streak of declines.
Valuation
From a valuation perspective, Palantir still feels “hard to buy” at current levels. However, this standout quarter effectively put the market’s aggressive de-rating cycle on pause. The post-earnings jump of roughly 12% reflects a shift in sentiment: investors are once again willing to pay a higher multiple for Palantir. If you try to read the market’s mindset, it resembles a “put-a-floor-under-it” approach—meaning that as long as the company can deliver on the targets it just set, and assuming no system-wide risk event, the downside from valuation compression may be limited.
In this sense, Palantir shares some similarities with Tesla, another stock that has traded at extreme valuations for years, but there are also important differences. The similarity is that both companies’ valuations have often looked detached from fundamentals. The difference is that Tesla’s premium has historically been justified by a very promising long-term vision, albeit with uncertain timing. Palantir’s case is more straightforward: if it can sustain high growth, then today’s high valuation can eventually be “grown into”—it becomes a matter of time and execution. Put differently, Tesla tends to support its stock by continuously extending the narrative, while Palantir supports its stock by letting results do the talking. As long as the business doesn’t stumble, the market’s tolerance for a premium multiple should increase materially.
Options Setup
Given that, from an options standpoint, the most sensible approach is to sell puts below the market (short puts). If the valuation is still elevated and you don’t want to buy shares outright at these levels, you can lower your effective entry by choosing a lower strike and selling puts—collecting premium while building a meaningful cushion in case you’re assigned. Since Palantir’s implied volatility (IV) remains relatively high, you can push strikes down to much lower levels and still receive decent premium.
The question is: how low would it be “reasonable”?
If the stock trades at $160 with a P/E of ~140x, and you insist on a “30x P/E” framework, the stock would need to fall to the $30s, which is obviously unrealistic. So it makes more sense to shift to price-to-sales ratio (P/S) model.
Management’s 2026 revenue outlook is about $7.2 billion, and with a market cap around $350 billion, the stock is trading at roughly 50x forward sales. If we assume it takes two years for the P/S multiple to normalize toward something like 15x, then a “low” level for the first year (2026) might be 26–28x. A 26–28x P/S would roughly correspond to a stock price around $100. That makes $100 a key price level—also a psychologically important round number that could act as strong support.
So, setting $100 as a put strike, investors can choose different expirations to compare premium: for example, June might yield around $3.6 in premium, while August might yield around $5.7. Conservative investors can push expirations further out and/or set strikes even lower; those who want a quicker resolution can choose nearer expirations and accept a higher strike accordingly.
140x P/E: Palantir Jumps 12% After Earnings — Too Expensive to Buy? Try This Options Setup
140x P/E: Palantir Jumps 12% After Earnings — Too Expensive to Buy? Try This Options Setup
Meanwhile, the previous peak of 207 seems not so easy to break. Therefore, a price somehow significantly higher than 207 could be set as a strike of a short call leg, which can be added to your short put position to balance the total delta exposure.
140x P/E: Palantir Jumps 12% After Earnings — Too Expensive to Buy? Try This Options Setup
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