Followers | 679 |
Posts | 140793 |
Boards Moderated | 36 |
Alias Born | 03/10/2004 |
Thursday, August 18, 2022 12:05:27 PM
By: Vince Martin | August 18, 2022
• PLTR stock has moved sideways since going public in late 2020
• The company’s financial performance, however, has been solid, answering two key questions surrounding the business
• Valuation remains a concern, but there’s a case for paying up here
Palantir Technologies (NYSE:PLTR) is a controversial company; it’s always going to be.
Its role in global warfare and domestic programs in the U.S. and Europe upsets many people. On occasion, even Palantir’s own employees have questioned their company’s contracts.
But when Palantir went public via a direct listing in 2020, analysts labeled it a controversial stock, for reasons that go far beyond politics. Skeptics pointed to two critical issues with the company’s business model.
The first was whether Palantir was, as it claims, a software company. Obviously, the Denver, Colorado-based company does develop software. Still, the customized nature of its solutions and the number of engineers required to install them has long led to claims that Palantir is more of a consulting company than a software firm. One ardent bull even addressed those concerns in April.
The second was Palantir’s reliance on the U.S. government for a good chunk of its revenue. Even disregarding the political nature of those contracts, government revenue typically doesn’t grow all that fast.
Even the company's management tacitly admitted this concern was valid. However, since going public, and even before, Palantir has focused on growing its presence in the commercial market.
Valuation still is a question mark, and last week’s earnings report looked disappointing. But growth investors should be taking a long look at PLTR here. The stock is now down two-thirds from its 52-week high.
Palantir Answers The Critics
In 2019, according to figures from Palantir’s Form S-1, Palantir’s gross margins were just 67%, down from 72% the year before. Repriced stock options were a factor, but the company also called out higher employee expenses.
Ostensibly, those expenses came from the engineers required to deliver Palantir’s custom-built solutions—which, again, is the mark of a consulting firm, not a traditional SaaS (software-as-a-service) provider.
The 67% print, meanwhile, was far lower than the 80%-plus figure generated by many larger software companies. That raised concerns that Palantir wouldn’t reach the same operating margins, leading investors to pay 20x revenue (or more) for faster-growing software plays.
However, as Palantir’s software products have accelerated their growth, gross margins have responded in kind. The figure was 78% in 2021 and closer to 79% in the first half of this year.
In terms of government reliance, there too results have improved. Commercial revenue more than doubled in 2021 and has done the same through the first half of this year.
Yet, PLTR stock hasn’t provided long-term gains. The stock opened for trading in 2020 at $10 per share and is currently trading at $9.43.
PLTR Weekly Chart
But, to be fair, that alone doesn’t make the stock a buy.
The Case For PLTR Stock
Based on 2022 guidance, Palantir still trades at more than 8x revenue. The company is guiding for an adjusted operating profit, but that figure excludes a huge amount of stock-based compensation. That expense has totaled $295 million already this year, a figure nearly equal to the full-year outlook for operating profit ($341 million to $343 million). In the first half, stock comp was more than 30% of revenue.
On the second quarter conference call, chief executive officer Alex Karp predicted the company wouldn’t be profitable until 2025. From that point, the company should have room for growth, but this still has an enterprise value of roughly $16 billion.
Still, this might be a company worth paying up for. The new software platforms are clearly hitting. Karp spoke passionately on the Q2 call, making a persuasive argument for his company and (indirectly) its stock. Karp argued that threats were rising globally, making Palantir’s products ever more valuable—and that those products had left competitors in the dust.
The CEO emphasized that point in an unusual way, admitting that Palantir this year had brought on “a number of customers…that, quite frankly, didn’t like us,” including the U.S. government.
That’s not something you’ll hear from just about any other CEO. But, to Karp and PLTR bulls, that’s precisely the point. PLTR isn’t just any other company, meaning it shouldn’t be valued as such. And at least as far as the business goes, Karp and the bulls have been right so far.
Read Full Story »»»
DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
• DiscoverGold
Recent PLTR News
- Palantir Designated “Awardable” Vendor for Department of Defense Chief Digital and Artificial Intelligence Office’s Tradewinds Solutions Marketplace • Business Wire • 04/17/2024 10:59:00 AM
- Palantir Announces Date of First Quarter 2024 Earnings Release and Webcast • Business Wire • 04/15/2024 08:05:00 PM
- Palantir and Colorado-Wyoming Regional Innovation Engine (CO-WY Engine) Awarded Inaugural US National Science Foundation Regional Innovation Engines Grant to Support Climate Resiliency • Business Wire • 04/15/2024 10:59:00 AM
- Palantir to Deliver Electromagnetic Battle Management - Joint Decision Support (EMBM-J DS) Prototype to the Defense Information Systems Agency (DISA) • Business Wire • 03/29/2024 10:59:00 AM
- Il Ministero ucraino dell'istruzione e della scienza e Palantir collaborano alla creazione di condizioni sicure per l'attività didattica in presenza nelle scuole • Business Wire • 03/28/2024 07:25:00 PM
- Le ministère de l'Éducation et des Sciences de l'Ukraine et Palantir s'associent pour créer des conditions sûres pour l'enseignement en personne dans les écoles • Business Wire • 03/28/2024 07:07:00 PM
- Ministerium für Bildung und Wissenschaft der Ukraine und Palantir arbeiten zusammen, um sichere Bedingungen für den Präsenzunterricht in Schulen zu schaffen • Business Wire • 03/28/2024 06:30:00 PM
- Ministry of Education and Science of Ukraine and Palantir Partner to Create Safe Conditions for In-Person Education in Schools • Business Wire • 03/28/2024 09:00:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/09/2024 12:59:38 AM
- Palantir to Unveil New Customers at Oversubscribed AIPCon • Business Wire • 03/06/2024 11:59:00 AM
- Army Selects Palantir to Deliver TITAN Next Generation Deep-Sensing Capability in Prototype Maturation Phase • Business Wire • 03/06/2024 11:59:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/06/2024 01:34:15 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/06/2024 01:32:23 AM
- RED 6 PARTNERS WITH PALANTIR TO INTEGRATE ONTOLOGY SOFTWARE DEVELOPMENT KIT (OSKD) • PR Newswire (US) • 03/05/2024 11:59:00 AM
- Palantir and Ministry of Economy of Ukraine Sign Demining Partnership • Business Wire • 03/04/2024 11:59:00 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 03/01/2024 11:58:26 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 03/01/2024 09:39:41 PM
- Form SC 13G - Statement of acquisition of beneficial ownership by individuals • Edgar (US Regulatory) • 02/26/2024 09:34:37 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/23/2024 01:09:47 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/23/2024 01:08:40 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/23/2024 01:07:28 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/23/2024 01:06:03 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/22/2024 09:12:51 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/20/2024 11:53:54 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/20/2024 11:49:18 PM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM
Avant Technologies Launches Advanced AI Supercomputing Network and Expansive Data Solutions • AVAI • Apr 23, 2024 8:00 AM
BestGrowthStocks.com Issues Comprehensive Analysis of Triller Merger with AGBA Group Holding Limited • AGBA • Apr 22, 2024 1:00 PM
Cannabix Technologies to Present Marijuana Breathalyzer Technology at International Association for Chemical Testing (IACT) Conference in California • BLO • Apr 22, 2024 8:49 AM
Kona Gold Beverages, Inc. Prepares for First Production Run Set to Launch May 17, 2024 • KGKG • Apr 22, 2024 8:30 AM