BLI Premium Update: Inside Palantir's Monster Quarter, Virgin Galactic's Flight Hiccup

Following up on our brief earnings preview last week, Palantir (NYSE: PLTR) absolutely crushed expectations with its latest quarterly report on Monday. Shares rallied nearly 40% on the week for good reason.

The period marked Palantir’s fifth straight quarter of GAAP profitability, with adjusted earnings of $0.08 per share doubling consensus estimates. Palantir’s better-than-expected 20% top-line growth was led (as expected) by a 32% jump in commercial segment sales (including 70% commercial revenue growth in the U.S.), while government revenue climbed a still-solid 11%. Palantir also grew its customer count by 35% from last year, helped by what Founding CEO Alex Karp described as “unrelenting” demand for large language models from commercial institutions in the United States.

Palantir is leaning on the success of the more than 500 AI bootcamps it has held since introducing its new Artificial Intelligence Platform (AIP) platform last year. In those bootcamps, it demonstrates to prospective clients how it can get AIP up and running in as little as a few hours, and delivering tangible results in just a few days — contrasted to the cumbersome, monthslong data integration projects in which many customers had already invested hundreds of millions of dollars.

Put simply, Palantir’s value proposition is so clear that enterprise clients are willingly putting aside their sunken cost fallacy biases to embracing its platform then and there.

From an investor’s standpoint, I’m delighted to watch this seemingly unstoppable company as it generates ever-greater operating leverage at scale.

Shares of Palantir are now up nearly 50% in the BLI Premium Portfolio. It’s now our second-largest position behind only SoFi Technologies (NASDAQ: SOFI), which also rallied hard on the heels of its own blowout quarter last month. I have no intention of parting ways with our shares of Palantir anytime soon.

Following its 11th successful spaceflight two weeks ago, commercial spaceliner Virgin Galactic (NYSE: SPCE) has announced it has reported a “flight issue” to the U.S. Federal Aviation Administration (FAA).

More specifically, Virgin Galactic says that its standard post-flight review found an alignment pin detached from its mothership during the “Galactic 06” flight. It also insisted that the detached pin did not pose a safety risk to the vehicles or crew, that it performed as designed during the mated portion of the flight (as the mothership and attached spaceship climb toward release altitude), and that it had no active function one the spaceship is released.

Investors can take solace knowing that Virgin Galactic has slowed its flight cadence to a quarterly pace starting this year as it wisely shifts resources toward development of its next-gen Delta spaceships.

But I’ve also publicly stated I’m keeping Virgin Galactic on a short leash, and won’t hesitate to sell if it experiences any significant hiccups as it works to scale its commercial flights. I don’t think this quite reaches the threshold of “significant” just yet — but I’ll be keeping an eye on what the FAA and Virgin Galactic say about the incident in the coming weeks.

Virgin Galactic is currently the second-smallest position in the BLI Premium Portfolio — trailing only iRobot (NASDAQ: IRBT) — and is easily the most speculative stock in the bunch.

After iRobot and Amazon (NASDAQ: AMZN) called off their impending merger amid regulatory challenges two weeks ago, I warned that I might decide to sell shares of the home robotics leader.

Today I’m making it official: I’ll be selling iRobot from the BLI Premium Portfolio on Monday.

I’ve previously suggested that — if another suitor didn’t step forward — iRobot could be fine as a standalone business under the leadership of Founding Chairman and CEO Colin Angle, and — with the help of a $94 million breakup fee — as it re-ramps its R&D and Sales & Marketing spend.

Unfortunately, while the blow is indeed being softened by the breakup fee, iRobot subsequently announced that not only is Colin Angle stepping down as CEO and chairman at the end of his current board term, but also that it will meaningfully reduce R&D and Sales & Marketing spend while laying off 31% of its staff. iRobot has also enlisted the help of “turnaround expert” Jeff Engel as Chief Restructuring Officer.

To be clear, iRobot might well outperform the market from here if it’s able to successfully implement its restructuring. But I fear it’s going to be a longer, harder slog than I’d previously anticipated when I added a small position in iRobot the BLI Premium Portfolio at launch.

So while I might revisit the stock in the future, I’m cutting bait on iRobot for now as I think that capital could be better utilized in any number of other high-quality stocks on my watchlist.