The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype. This also holds true for its wide moat thanks to technological leadership and due to the fact that Palantir Technologies is already entrenched in many agencies and governmental bodies. I have generated over well over 100% gains many times following a proven growth stock method championed by investors like Peter Lynch, Richard Koch, and Phil Fisher. Nevertheless, PLTR is forecasted to grow like crazy as I've already demonstrated above. The DCF valuation employs the Free Cash Flow to the Firm (FCFF) methodology to arrive at the intrinsic value of the company. values the company at around $40 billion. I have no business relationship with any company whose stock is mentioned in this article. I do much more than just articles at Cash Flow Kingdom: Members get access to model portfolios, regular updates, a chat room, and more. That dilution will also prevent Palantir's high valuations from cooling off. 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. Please disable your ad-blocker and refresh. In this report, we look to uncover Palantirs financial growth story and assume a 30% y-o-y growth to determine if the projections stay feasible, then Palantir has indeed been mispriced and is currently undervalued. 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. This is somewhat difficult for some investors to remember. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years. I have no business relationship with any company whose stock is mentioned in this article. Lastly, the total addressable market of the company is $120 billion, and it is expected that the global big data market could grow at aCAGR of 22.4%through 2030. Ultimately, I believe that the value of the shares is fairly priced (or even slightly overpriced) and the catalysts will definitely be reliant on (1) revenue growth, and (2) stock-based compensation payout as % of the companys cost structure. Hence, projecting such valuations does not seem realistic and the base cases outcome is recommended. Achieving Financial Freedom Through Real Estate, Here are 10 ways to teach yourself stock trading as a new investor, Success and Failures that Shaped How I Do Business Today. Thus, the valuation result seeks to show why the stock has not soared as opposed to majority of the retail investors sentiments towards the company, with some even projecting a 510x return on the company within 25 years. Since trades have not actually been executed, results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity, and may not reflect the impact that certain economic or market factors may have had on the decision-making process. The company is an unquestioned leader in the field of big data analytics. This information is provided for illustrative purposes only. SBC and share dilution are annoying. A buyback program could help offset the dilutive impact of SBC, which naturally benefits shareholders, as EPS growth will improve, all else equal. Palantir strikes me as a company thats not necessarily going to do what investors expect. Could Palantir Become the Next Salesforce? Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. Join today for less than $2 per day. That's why it's often far better to look at it over a period of time. In turn, banks will respond by strengthening their compliance programs. I suspect you are quite familiar with Microsoft (MSFT), Amazon (AMZN), Facebook (FB) and Alphabet (GOOGL). 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. Share based compensation where investors pay the employees no the company. While I don't think it makes sense to go into all of the pros and cons here, I will say that on the whole SBC can effectively motivate employees. PLTR won't sink, but there will be a bit of pain to absorb. Dear MULN Stock Fans, Brace Yourself for a Reverse Stock Split. Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. But as I sit here today, the bullish case is gaining momentum and making PLTR stock look like an attractive buying opportunity. Perhaps I'm wrong here but to my eyes there's not an obvious correlation between share count and capital gains over 10 years. 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. Analyst Coverage Information Request Investor Email Alerts. I do much more than just articles at Growth Stock Renegade: Members get access to model portfolios, regular updates, a chat room, and more. However, I need to point out a few things. Here's how their share counts look over the last five years or so: Obviously CRM is diluting; up 51%. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. Insider sales are hurting shareholders. Still, that valuation comparison is not fair. Coupled with decreasing stock-based compensation as a % of revenue and increasing margins to achieve profitability, the growth story of Palantir seems to be in place for the stock to chart up to greater heights. The company is one of the most trusted analytics platforms for the U.S. government and its allies. 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. Its CEO, for example, received a massive $1.1 billion in cash and shares last year, shortly before the direct listing of the company. Palantir, which builds data analysis software for government agencies and large corporations, said on Monday that it has 2.17 billion diluted shares. Palantir SBC is costly and is here to stay, therefore must be incorporated into a financial valuation. 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. Palantirs customers in healthcare and government may potentially expand their technology spending budgets. Please. Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 its presented investors with a buying opportunity. Here I do see a stronger relationship between share count and price. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. Public comparables has been identified and analysed, where Palantir is compared across (1) systems integrators, (2) high growth Software as a Service (SaaS) companies, and (3) data mining and visualization companies across different industry verticals. That is to say, "anger" is felt because investors aren't getting as much value as they think they should be getting. 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. Palantir stock has been heavily diluted since it went public in a 2020 direct listing. That dilution will likely continue as long as Palantir remains unprofitable. Feast your eyes on their share counts over the last 10 years or so. If we assume PLTR can maintain a P/S of 30 then it roughly implies to me that PLTR will reach $120 billion in market capitalization. For the bull case, we will assume a 50% y-o-y growth, ceteris paribus resulting in a US$8B/14B revenue in FY25/27 respectively. We accomplish this by combining several different income streams to form an attractive, steady portfolio payout. This is almost perfectly in line with the consensus price target of $21.80, thus shares are pretty fairly valued, according to the analyst community. Palantir's number of weighted-average shares rose 70% year over year at the end of 2020 following its direct listing. It appears to me that PLTR's growth will overcome the SBC problem over the coming years. Google. Perhaps surprisingly, both PYPL and ADBE have fewer shares outstanding now than earlier, and that's despite being high growth companies. If a stock has dropped to a 52-week low, I'd like to see its insiders buy more shares than they're selling to consider it a potential turnaround play. One out of eight analysts have given Palantir a Buy rating, three have Hold ratings, and the remaining four have suggested a Sell. And, the point is that an increase in share count is more like friction than a full stop. And, that's also in line with PLTR's long-term sales view, back from Q4 2020. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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. Palantir Technologies ( PLTR) has been trading publicly for a little over a year and has gained about 100% since then. Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 its. In the first nine months of 2021, its revenue rose 44% year over year to $1.11 billion, while its net loss narrowed from $1.02 billion to $364 million. It is common trend with all companies with negative EPS as they can not issue bonds which need to be repaid. Palantir Might Be Worth the Buy for Patient Investors. An adjusted free cash flow (FCF) of $119 million in the last quarter and a margin of 30% is hard to ignore. Value investors could buy Microsoft (NASDAQ:MSFT) at 14 times sales or Oracle (NYSE:ORCL) at 6.8 times. 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. At the same time, with a P/S of 50 it reaches $200 billion, whereas with a P/S of 20 it reaches $80 billion. Palantir Technologies (PLTR) has an average rating of hold and price targets ranging from $4.50 to $15, according to analysts polled by Capital IQ. 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. The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. I remain bullish. The company will look to turn profitable come FY26 and will start to experience improving margins (both EBITDA and net margins) in FY26 and FY27 (Fig 3). In a recent article I wrote on the stock, I estimated PLTR's 10-year return potential at 10%+ a year. And, that's why I emphasized adjusted numbers in Palantir: The Rule Of 40. Start your free two-week trial today! And as Hake notes, even if investors have to wait two years for the stock to hit that target, they would still get an average annual return of 29.54%. PLTR stock already tripled since its initial public offering. 7 Top-Rated Energy Stocks to Fill Up Your Portfolio. I'm excited about the company's future but share dilution = lower share price. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years. In the last quarter, Palantir reported a. in commercial revenue. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. This is on the low side because of the weak return on invested capital. Due to the fact that a high-growth company also has many other ways to invest its operating cash flows, apart from using them for buybacks, it seems likely that buybacks will not be a priority in 2021 and 2022, and possibly beyond that. Strong deal value, growing 50% to $3.6 billion, signals strong business ahead. Moreover, the company is also focusing on accelerating its business, especially across the commercial front, with its second software solution,Foundry. Stock Prodigy Who Found NIO at $2 Says Buy THIS Now, Man Who Called Black Monday: Prepare Now.. exercisable in time.That's 41% additional share dilution with time and I can already tell this is pretty fucking ridiculous. In the Q3 2021 earnings conference call on Nov.9, he said, legacy compliance solutions are often 2 or more decades behind. InvestorPlace - Stock Market News, Stock Advice & Trading Tips. Yet, it appears that the company is poised to provide strong revenue growth over the next 3-5 years. Facebook (FB) or Alphabet (GOOG) (GOOGL) when they were smaller. MULN Stock Alert: Why Are Investors Suing Mullen Automotive? 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. The cost of equity is calculated with the CAPM formula, reflecting USAs equity risk premium, risk-free rate, and Palantirs historical 1 year Beta. All rights reserved. Backtested performance is not an indicator of future actual results. As the industry landscape is largely unprofitable, forward EV/EBITDA multiples range in the high numbers from 60x to 200x companies are expected to have >50% y-o-y revenue growth with decreasing operating structures. The U.S. Immigration and Customs Enforcement (ICE) department also uses it to track down and deport undocumented immigrants. I am not receiving compensation for it (other than from Seeking Alpha). The Upside Potential for SOFI Stock Is Limited. The information is not intended to be used as the basis of any investment decision by a person or entity. Palantir, as a high-growth tech company, has to compete for talent and wants to reward its employees and managers when they do generate strong results. Is this happening to you frequently? Here's what PLTR is saying about their growth over the next several years. Insider sales are hurting shareholders. Second, mobility is growing in the automotive sector. I hope to see you inside Growth Stock Renegade. Disclosure: 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. I'll Avoid These Sectors In 2023 3:39AM ET 1/15/2023 Seeking Alpha. The Motley Fool has a disclosure policy. One of, if not THE most heavily compensated CEO of any US company in 2021. 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. I am bullish on PLTR stock. Today, Palantir trades at $22, for a $42 billion market capitalization. 1125 N. Charles St, Baltimore, MD 21201. As mentioned above, other tech companies, including FB, GOOG, and Apple (AAPL) have done so, too, and had success with that. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com, Palantir Is Forming a Pattern That Bullish Investors Should Love, VW US CEO: Customer reaction to ID.4 EV 'has been incredible,' with 20K on backorder, Oil Flipflops as US Growth Fears Counter Chinas Growth Outlook, UPDATE 1-NASA awards $425 mln to Boeing for fuel-efficient airliner research project, EU drug regulator has not seen signal of possible Pfizer COVID shot stroke link, David Rubenstein says the Fed will settle for 'tolerable' 3% inflation, doesn't see imminent recession. If history repeats itself, then PLTR stock could set up as a profitable trade. Now that shares are down slightly, Palantir is a stock to consider again. WebTo give you an idea of how many shares were covered under the 2010 Plan, this is from the S-1 (emphasis mine): As of June 30, 2020, options to purchase 308,905,744 shares of Today, Palantir trades at $22, for a $42 billion market capitalization. Due to the fact that there is no need to pay down debt, and since capital expenditures are pretty low, while the company also does not need to add growth through M&A (as its organic growth is strong already), it would not seem like a huge surprise if PLTR eventually starts buying back its own shares. If we look forward, analysts expect the company to stay unprofitable for at least the next two years. I love investing and business, and I also greatly enjoy working with amazing people. So today, I'll take a look at five red flags that might limit Palantir's near-term gains. With a market cap of $36 billion, Palantir is still valued at 24 times this year's sales. Thanks for pointing this out. Palantir can implement solutions quickly. Palantir generated $1.09 billion in revenue in 2020, but it posted a whopping net loss of $1.17 billion. But this is a statistic that requires context. WebPalantir Technologies Inc. (PLTR) NYSE - NYSE Delayed Price. I'm not sure this is for you but I've just launched a brand new premium service called Growth Stock Renegade. And I can certainly understand if investors might wonder why the company chose to deploy capital in this way as opposed to buying back shares. Of particular concern was the approximately 17.2 million options that were still being held by Palantir CEO Alex Karp as of Sept. 30. It is said that back in 2011, the U.S. Army had reportedly used Gotham to track down Osama Bin Laden. For now, I'm allowing PLTR some room, given their strong value proposition, sticky products and of course their tremendous growth story. Palantir has a strong moat that gives customers an edge. 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.
Mark Webber Ann Neal Split,
How To Calibrate Scales With Australian Coins,
Michael Randall Hood Cause Of Death,
Engelbert Humperdinck Scott Dorsey,
Articles P
