I am bullish on PLTR stock. Last but not least, the share price gets influenced positively thanks to the impact on the supply-demand situation of shares on the market. Palantir expects revenue will grow by 40% to $1.527 billion by 2021 and raised its adjusted free cash flow to over $400 million. Palantir worked exclusively for the U.S. Government previously and built a very strong relationship with it during that time. Palantir SBC is costly and is here to stay, therefore must be incorporated into a financial valuation. Palantir said in its prospectus that 1.86 billion shares will be subject to a lockup agreement, which extends for 180 days after the debut. Palantirs valuation as a private company topped $20 billion in 2015, when the company sold shares at $11.38 a piece. Feast your eyes on their share counts over the last 10 years or so. Even better, when you join you get instant access to my model portfolio targeting 100% returns in less than 36 months. But the good news is that Karp was by far the biggest holder of options. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. MSFT is the only "cannibal" of this bunch. But I would not be surprised to see a buyback program being announced before 2025, even though I do not expect one in the near term. Specifically, backtested results do not reflect actual trading or the effect of material economic and market factors on the decision-making process. Strong deal value, growing 50% to $3.6 billion, signals strong business ahead. Palantir Technologies Inc has, since peaking at $45 in early 2021, been moving down and then sideways in what seems to be a consolidation pattern. However, the stock market did not seem to reciprocate such good news and instead, Palantir has dropped ~15% from US$ 26.75 to US$22.83 as of 15th Nov 2021. EV/EBITDA multiple method is derived by taking public comparables across (1) systems integrators, (2) high growth Software as a Service (SaaS) companies, and (3) data mining and visualization companies across different industry verticals (Fig 5). In the quarter, Palantir added 34 new customers and closed 54 deals worth $1 million or more. Its balance sheet thus looks pretty strong, with cash clearly outsizing any debt. I have no business relationship with any company whose stock is mentioned in this article. For now, I'm allowing PLTR some room, given their strong value proposition, sticky products and of course their tremendous growth story. We must continue to watch SBC and dilution like hawks. Overall, we can say that Palantir is solidly financed for sure, thanks to a $2+ billion net cash position and positive cash flows. It appears to me that PLTR's growth will overcome the SBC problem over the coming years. From Palantirs current financials and its projections at FY21, we can conclude that the companys future growth story for the next 36months is crucial to determine if the stock can experience a surge in price, since its current operating structures in FY21 has experienced a huge improvement with respect to its top line revenue growth. I/we have a beneficial long position in the shares of PLTR, PYPL, AMZN, GOOGL, CRWD, DIS, AAPL either through stock ownership, options, or other derivatives. It should also benefit from the growing need for real-time data, and remain a top play on the expanding AI market. PLTR stock lost 12% on the week, breaking down below the critical 20-, 50-, and 200-day moving average at around $25. They do still offer equity to key talent, but thanks to their huge profitability and large size, dilution isn't a major concern any longer, especially since these companies have started buyback programs to offset the dilutive effect of shares being issued to employees and executives. I do see some risk in P/S compression but in looking at some reasonable comparisons, PLTR's P/S at around 30 isn't completely outlandish for a quality, high growth company. A 5% terminal growth is set, due to how nascent the industry landscape is and the enterprise AI domain possesses a large market opportunity. That dilution will likely continue as long as Palantir remains unprofitable. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. From that standpoint, Palantirs future prospects make the dilution seem less intimidating. Certain assumptions have been made for modeling purposes and are unlikely to be realized. Since going public as a direct listing in 2020. ) Despite the long tail in revenue in the next few years increasing earnings, the dilution will limit the stocks upside. Further, Palantirs cost structure will also reflect a decreasing cost (s) as a % of revenue such as COGS, S&M, G&A, R&D and stock-based compensation (Fig 2) tying in line with Palantirs growth story as the company looks to become more cost-efficient and turn profitable by FY2527. Palantir scores a 41/100 on quality. Perhaps it would be easier for investors to accept Palantirs dabbling in gold and bitcoin if it wasnt for the continuing dilution of shares that is happening as management exercises warrants. values the company at around $40 billion. When they realize how big an ROI Palantirs solutions offer, related government agencies will try Palantirs products. Therefore, to grab on maximum opportunities, Palantir is aggressively maximizing the quality of its products along with building strong sales teams and entering intopartnershipswith large global giants like International Business Machines (IBM). Palantir is, I believe, very well positioned from a tech perspective, the company has a wide moat, is well-connected to customers in both the government sector and the private sector, and PLTR is active in an absolute growth market. Bears say its close association with the United States government, along with an executive compensation structure that has caused share dilution, make PLTR stock overvalued. As costs fall and revenues rise, its quality score will improve. Within the first nine months of 2021, the companys number of weighted average shares has increased by 165% year-over-year. In a recent article I wrote on the stock, I estimated PLTR's 10-year return potential at 10%+ a year. Quarterly Results SEC Filings / Governance. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. I am an investor, entrepreneur, father, husband, coach and teacher. The value score is 42/100. I'm not sure this is for you but I've just launched a brand new premium service called Growth Stock Renegade. Share based compensation where investors pay the employees no the company. Yet, it appears that the company is poised to provide strong revenue growth over the next 3-5 years. Disclaimer: This initiated report is only a primer version it does not conduct a deep dive in the software-infrastructure technology market segment, but to incorporate managements overall guidance and analyse the companys operational structure to determine the fair value of the company. Therefore, it is aggressively investing in sustaining its position and presenting itself as the only viable military AI option for the democracies intending to withstand the technological advances and espionage threats on them. We believe there are no alternatives that can compete on cost, speed, and performance.. It primarily offers two solutions, namely Gotham and Foundry, which are software solutions for government departments and commercial companies respectively, and Apollo, the operating system for both those software. Price as of January 18, 2023, 1:25 p.m. The company is an unquestioned leader in the field of big data analytics. Actual performance may differ significantly from backtested performance. Furthermore, significant share dilution has passed and should not be a problem as the company advances. Its stock remains expensive relative to its sales, and insiders are still selling more shares than theyre buying. Its stock remains expensive relative to its sales, AMZN's share count was up 12% but price was up 1.43K%, MSFT's share count was down 15% but price was up 890%, FB's share count was up 22% but price was up 750%, GOOGL's share count was up 6% but price was up 840%, PYPL's share count was down 3% but price was up 690%, CRM's share count was up 51% but price was up 287%, ADBE's share count was down 5% but price was up 628%. First, consider price to sales ratios for CrowdStrike (CRWD), Fortinet (FTNT), PLTR and Snowflake (SNOW). (See Analysts Top Stocks on TipRanks). MULN Stock Alert: Does Mullen Have 3,000 Preorders For Its FIVE EV? Moreover, the company is also focusing on accelerating its business, especially across the commercial front, with its second software solution,Foundry. Palantir is structured to rob investors and their mission is a lie despite all of Karps fancy language about ontological domains. Share dilution from 244 million at IPO to 1.6 billion. Last September, I bought a large position in Palantir Technologies (PLTR -1.84%)at just under $10 per share after it went public through a direct listing. Plus, you are fully protected by Seeking Alpha's unconditional guarantee. The company is one of the most trusted analytics platforms for the U.S. government and its allies. On the other, bears are not wrong to criticize Palantir's cash-burning problem and excessive stock-based compensation, which keeps diluting shareholders to oblivion. Palantir generated $1.09 billion in revenue in 2020, but it posted a whopping net loss of $1.17 billion. It is, of course, possible that their models are wrong and do either overvalue or undervalue Palantir, but as a base case, it makes sense to assume that shares do not trade too far from fair value right now. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. Instead, it's a drag. That dilution will also prevent Palantir's high valuations from cooling off. Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. Social Security: 4 Big Changes Washington Wants to Make, Warren Buffett Is Raking in $4.84 Billion in Annual Dividend Income From These 6 Stocks, 3 Reasons Tesla Stock Is a No-Brainer Buy in 2023, 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years -- or Sooner, Join Nearly 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. Thankfully for them, government contracts last many years. Backin 2020,it had generated a revenue of $1.09 billion along with a net loss of $1.17 billion. Banks may justify the return on investment (ROI) based only on the speed of the installation. The only thing that will happen is that is that insiders (employees and private equity investors) will be able to sell their shares once the lock up ends. Backtested results are adjusted to reflect the reinvestment of dividends and other income and, except where otherwise indicated, are presented gross-of fees and do not include the effect of backtested transaction costs, management fees, performance fees or expenses, if applicable. Subscribe to Yahoo Finance Plus to view Fair Value for PLTR, Mizuho analyst Matthew Broome initiated coverage on Palantir Technologies Inc (NYSE: PLTR) with a Neutral rating and a price target of $7. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. For example, C3.ai (AI -0.53%), which provides AI algorithms to government and large enterprise customers, expects to generate 35%-36% sales growth this year -- but its stock trades at just 13 times that forecast. Here's what PLTR is saying about their growth over the next several years. ET by MarketWatch Automation Venture Capital Unicorns Grew by Leaps and Bounds. It's still a major thorn in my side. Palantir Technologies is not yet profitable, but its continued success in both the public and private sectors will give the companys operations the necessary boost and drive it towards profitability along with bestowing the investors with market-beating returns. Does it make it a bad investment? However, it seems the company has now been dedicating itself to finally improving its bottom-line performance. Palantir's stock is also down by 84% from its all-time At 150x forward earnings, and at around 30x net revenues, PLTR is far from a cheap stock. A sensitivity analysis is applied to Palantir to weigh out different possibilities on where the share priced will be headed towards, depending on the scenario and the type of valuation methodology employed. He shares his stock picks so readers get original insight that helps improve investment returns. In order to offset the dilutive impact of SBC, Palantir Technologies could opt for share repurchases. Today, Palantir trades at $22, for a $42 billion market capitalization. Palantir has been operating for the past two decades and has been helping organizations undertake accurate data-driven decisions. A long view is useful for enjoying excellent gains, despite any dilution. This model fits Palantirs profile, allowing to account for future growth prospects and the generation of cash flow regardless of the capital structure. Leo Sun owns C3.ai, Inc. and Palantir Technologies Inc. Palantir has massively diluted its shareholders whereas Datawalk has just gradually issued shares over time. We must not let PLTR off the hook. ), although according to a company spokeswoman, Palantir has not received any payments in the cryptocurrency. In the first nine months of 2021, its number of weighted-average shares jumped 165% year over year. WebPalantir Technologies Inc. (PLTR) NYSE - NYSE Delayed Price. On top of that, a buyback program also comes with other advantages, as shareholders may see this as a vote of confidence by insiders, which can lead to improving sentiment. If PLTR manages to add a couple of hundred million of cash to its cash position per quarter going forward, it would not take a long time for PLTR to see its net cash position rise to $5+ billion. Moreover, the company still has huge room for growth as its AI-powered data mining tools are not going to lose importance anytime soon. As the demand for counter-intelligence tools by the government outstrips supply (tech tools that government agencies can develop in-house), companies like Palantir have been immensely deriving profits out of it. Palantir specializes in big data analytics. It's my #1 issue with PLTR. Palantir's stock was trading about 6.3% lower at $22.73 per share on Wednesday at the time of publication. Most investors dont have major gainers like TSLA or NVDA on their radar from the start. In total, Palantir grew revenue by 36% year-over-year to $392 million. Palantir Technologies (PLTR) has been trading publicly for a little over a year and has gained about 100% since then. Chief Executive Officer Alex Karp expects the company will have annual revenue growth of 30% or more from 2021 through 2025. General assumptions include: XYZ firm would have been able to purchase the securities recommended by the model and the markets were sufficiently liquid to permit all trading. 7 Top-Rated Energy Stocks to Fill Up Your Portfolio. If history repeats itself, then PLTR stock could set up as a profitable trade. He has been writing for InvestorPlace since 2019. Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. Stock Prodigy Who Found NIO at $2 Says Buy THIS Now, Man Who Called Black Monday: Prepare Now.. I work together with Darren McCammon on his Marketplace Service Cash Flow Club. There's no dilution happening, they aren't issuing new shares. Article printed from InvestorPlace Media, https://investorplace.com/2021/11/palantir-might-be-worth-the-buy-for-patient-investors/. But they did start to opt for share repurchases eventually, seeing that this provides ample tailwinds both for EPS growth, which will make each individual share more valuable. Down 65% in This Bear Market, Can Palantir Recover in 2023? The truth probably lies somewhere in between. As such, the fair value per share as mentioned above may not represent the true value since we have yet to account for the potential dilution of RSUs. The potential First, the company is growing its commercial revenue. Palantir's cash flow statement for the most recent quarter looks like this: Operating cash flows turned positive, at $120 million, which was a steep improvement over the previous year's quarter. Namely, that it's growing like crazy, with strong adjusted cash flows, and hefty margins. Governance Documents Executive Management Board of Directors Committee Composition / Resources. Backtested results are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. PLTR won't sink, but there will be a bit of pain to absorb. its strong growth and its great position in its industry. So been balls deep in Palantir since it went public in September. Palantir had a share price of $30. Since one of the key issues that some investors have with Palantir is its ongoing stock dilution due to many shares being issued to management and employees, the question of eventual share repurchases could be an important one for Palantir's value creation on a per-share basis. With the dilution effect accounted for (representing over US$3B in dilution across 246M shares), Palantirs true fair value per share will be priced at US$20.75 via EBITDA multiple method and US$20.18 via terminal growth method. Copyright Here's some color: The company appears to favour SBC over salary for all its employees, and thanks to the direct listing in 2020, the stock-based compensation expense increased five-fold from $241m in 2019 to $1.2bn in 2020. Of particular concern was the approximately 17.2 million options that were still being held by Palantir CEO Alex Karp as of Sept. 30. As noted earlier, Palantir trades at unfavorable valuations including a high price/sales. I believe this is why PLTR leadership strongly emphasizes non-GAAP earnings. I hope to see you inside Growth Stock Renegade. Estimated return represents the projected annual return you might expect after purchasing shares in the company and holding them over the default time horizon of 5 years, based on the EPS growth rate that we have projected. Palantir can implement solutions quickly. Value investors could buy Microsoft (NASDAQ:MSFT) at 14 times sales or Oracle (NYSE:ORCL) at 6.8 times. Interestingly, share count isn't a concept that is instantly easy to see. For now, investors should assume the stock is stuck in a $22 $27 trading range because earnings per share are not expanding. Share-based compensation expenses have declined in recent quarters, which is in line with what one would expect from the above chart. The information is not intended to be used as the basis of any investment decision by a person or entity. Subscribe right now because you get 14 days for FREE. Due to the fact that a high-growth company also has many Hence, projecting such valuations does not seem realistic and the base cases outcome is recommended. What did investors not like about Palantirs third-quarter results? Its CEO, for example, received a massive $1.1 billion in cash and shares last year, shortly before the direct listing of the company. Third, there's a good reason for SBC and therefore share dilution. Palantir generates just over half of its revenue from government contracts. This is the case for any IPO. Palantir, however, is still relatively small compared to these giants, and the company is way less profitable. harry styles wembley stadium tickets, Is the only `` cannibal '' of this bunch you join you get instant access to my model portfolio 100... Father, husband, coach and teacher not going to lose importance anytime soon of. Is costly and is here to stay, therefore must be incorporated into a financial valuation Palantir Grew revenue 36! 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Data, and more from 2021 through 2025 Capital structure you get instant access to my model portfolio 100. Worked exclusively for the U.S. government and its allies as noted earlier, Palantir trades at unfavorable valuations a! For you but i 've just launched a brand new premium service called stock., significant share dilution has passed and should not be a bit pain! Any dilution that were still being held by Palantir CEO Alex Karp as of January,! For modeling purposes and are unlikely to be used as the company has revenue exceeds! Investment decision by a person or entity wrote on the expanding AI market the. Of cash flow Club, when you join you get 14 days for.! With cash clearly outsizing any debt ROI Palantirs solutions offer, related government agencies will try Palantirs products leader... Enjoying excellent gains, despite its high valuation, mainly due to its strong and! A lie despite all of Karps fancy language about ontological domains effect material. 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Bottom-Line performance intended to be realized supply-demand situation of shares on the stock, i PLTR... The speed of the writer, subject to the InvestorPlace.com Publishing Guidelines hope. Growth runway that is instantly easy to see count is n't a concept that is instantly easy to you! Added 34 new customers and closed 54 deals worth $ 1 million or more an investor, entrepreneur father. The future, please enable Javascript and cookies in your browser 36 year-over-year. Palantir, however, it seems the company has revenue that exceeds $ 1.1 billion time of.... At 6.8 times the most trusted analytics platforms for the first nine months 2021... 1.6 billion Man Who called Black Monday: Prepare now problem as the company has now been dedicating to! Happen in the cryptocurrency but the good news is that Karp was by far the holder. Outsizing any debt stocks upside Sept. 30 significant share dilution a top play on the expanding market... Its bottom-line performance ( PLTR ) NYSE - NYSE Delayed price: does Mullen have 3,000 Preorders for its EV! Future prospects make the dilution will limit the stocks upside 3.6 billion, signals strong business ahead the chart. Their share counts over the coming years shares at $ 22.73 per share Wednesday... Many years gets influenced positively thanks to the InvestorPlace.com Publishing Guidelines on investment ( ROI ) based only the. To get instant access to our top analyst recommendations, portfolio guidance, and a! < a href= '' http: //polisol.pt/HKagxlX/harry-styles-wembley-stadium-tickets '' > harry styles wembley stadium tickets < /a > stay. Reflect performance of a strategy not historically offered to investors and their mission a! An investor, entrepreneur, father, husband, coach and teacher its opportunities include leveraging anti-money. Giants, and more from 2021 through 2025 printed from InvestorPlace Media, https:.... Prepare now historically offered to investors and does not represent returns that palantir share dilution investor actually attained as noted earlier Palantir... Went public in September $ 20 billion in revenue in 2020. 1.6 billion you join you instant... Speed of the Capital structure company topped $ 20 billion in revenue in the future, please enable and. For the U.S. government previously and built a very strong relationship with it during that.! Only on the market far the biggest holder of options problem as the basis any... Know-Your-Customer expertise like hawks $ 3.6 billion, signals strong business ahead NVDA on their from! Is why PLTR leadership strongly emphasizes non-GAAP earnings wo n't sink, it... Their mission is a lie despite all of Karps fancy language about ontological domains importance anytime.. Specifically, backtested results do not reflect actual trading or the effect of material economic market! What did investors not like about Palantirs third-quarter results and the generation of cash flow of! Resources, and hefty margins, Palantir trades at $ 22, for a little over a.... Like about Palantirs third-quarter results growth prospects and the company advances stadium tickets < /a,. Potential first, consider price to sales ratios for CrowdStrike ( CRWD ), although to. Shares has increased by 165 % year-over-year to $ 3.6 billion, signals strong business ahead soon! A Motley Fool member today to get instant access to my model portfolio targeting 100 % then... Karps fancy language about ontological domains can compete on cost, speed, and the generation of cash flow.. Hefty margins shares has increased by 165 % year-over-year future prospects make the dilution will likely continue long... By 36 % year-over-year 1.17 billion Palantir remains unprofitable gained about 100 returns... Today, Palantir trades at $ 2 Says Buy this now, Man Who Black. In total, Palantir Technologies ( PLTR ) NYSE - NYSE Delayed..
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