Palantir falls 10% after lower profit margin guidance overshadows 3rd-quarter earnings beat

• Palantir stock fell as much as 10% on Tuesday after guiding for lower profit margins next quarter.
• The weaker guidance overshadowed Palantir's third-quarter earnings beat.
• Palantir continues to expect annual revenue growth of at least 30% through 2025.

Palantir stock fell as much as 10% on Tuesday after strong third-quarter earnings were overshadowed by weak guidance for fourth-quarter profit margins.

The data-analytics company said it expects profit margins of 22% in the fourth quarter, down from 30% in the prior quarter and below analysts' expectations for 24%, according to data from Bloomberg.

While the margin guidance missed, Palantir delivered another quarter of solid growth, and said it expects the growth to continue for years to come.

Third-quarter revenue jumped 36% to $392 million, beating analyst estimates by nearly $6 million. The company said it added 34 new customers in the quarter and closed 54 deals worth at least $1 million, of which 18 deals were worth $10 million or more.

Palantir said it expects fourth-quarter revenue of $418 million, ahead of analyst estimates of about $402 million, and reiterated its long-term guidance that revenue will grow 30% annually between now and 2025. The company also raised its full-year 2021 revenue growth guidance to 40% from a prior view of 30%.

That long-term forecasts are likely reassuring to Ark Invest, which counts Palantir stock as its 13th largest position across all of its ETFs after building a near $1 billion stake. Palantir is held in six of Ark's eight ETFs.