I have no business relationship with any company whose stock is mentioned in this article. If the company is now starting to focus on smaller contract value, commercial-type contracts, that could prove dilutive to the company's margins. [Updated 11/9/2020] Why Did Palantir Stock Soar? Palantir Technologies gross profit for the quarter ending September 30, 2022 was $0.370B, a 21.26% increase year-over-year. This is problematic for Palantir, as the government business has lower levels of transparency, with investors also valuing government contractors at lower multiples. Michael Vi/iStock Editorial via Getty Images. On the conference call with analysts, management called international commercial revenue "about flat," due to the strong dollar and other headwinds. How long should patient shareholders wait before carefully knocking on Palantir's door and asking; "Y'know, I lent you some money a few years back, any idea when I can start seeing some return on that?". Because Palantir has no real peers. What if youre looking for a more balanced portfolio instead? by TheoLeo Fri Nov 13, 2020 9:01 pm, Post But many years without profits is not unusual for fast-growing tech companies. Additionally, Palantir is often mentioned on Reddit boards and could cause large price movements, depending on what the community is attempting to do. Palantir is focusing on acquiring new customers and adding new contracts - when every sale they make adds more losses, not profits, to their balance sheets. In 2021, its gross profit amounted to $1.2 billion (margin of 82% excluding stock-based compensation), and this margin is not expected to change much in coming years, which means Palantirs gross profit should increase to about $3.1 billion by 2025, on revenue of $3.8 billion. I personally don't believe, given share price performance and how the SBC is split among the employees, that this acts as a big motivator anymore. Per the Trefis machine learning engine which analyzes historical stock price movements, PLTR stock only has a 36% chance of a rise over the next month (21 trading days). Another big catalyst is likely to be a stronger performance of Palantirs commercial operations. I/we have a beneficial long position in the shares of EADSY either through stock ownership, options, or other derivatives. So what has really changed for Palantir stock in recent months to justify this change? High CAC (Customer Acquisition Costs) or sales/marketing costs compared to income or sales revenue are typically indicative of advanced products that require a great degree of marketing and tailoring. Other impressive metrics include the total number of deals closed, which were up 63% from last year. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. If you have an ad-blocker enabled you may be blocked from proceeding. We know that Palantir will achieve profitability soon. Discounted offers are only available to new members. As I mentioned above, governmental contracts account for the majority of the company's revenue. Palantir Technologies shares outstanding for the quarter ending March 31, 2022 were 2.036B, a 11.81% increase year-over-year. The sell-off is largely driven by a mixed December quarter earnings report. But I feel like this topic relates to index investors as well, as we hold these unprofitable businesses in our portfolios and it is helpfull to sometimes look under the hood of an index to see what we are acually buying. The reason is that it doesn't really fulfill any of my targets as far as investments go. Remember, as interest rates rise, debt will become increasingly more expensive. It's my view that the company is not investable, even at this valuation. In fact, Palantirs guidance is to reach annual revenue of around $1.9 billion in 2022, which is an increase of 23% compared to the previous year. Invest better with The Motley Fool. In addition to tech-oriented venture capitalism, Thiel is also known for involvement in conservative politics, being one of the most prominent supporters of President Donald Trump's 2016 campaign. You can learn more about IPOs here. That leaves international commercial revenue as the huge shortfall here. Pretty good returns - as long as you understand that even under these circumstances, under the current profits and cost structure, even $4 is too much from a P/S and a P/Revenue perspective. More significantly, revenues from the top 20 customers grew even faster at 34%, indicating that loyalty is strong, with customers seeing more value in the companys offerings. Firstly, investors dont seem too pleased with the companys continued over-reliance on the government sector for growth. What this means is that despite record customer growth and record interest for the company's services, the company as of yet fails to turn a single dollar of GAAP profit. Indeed, even assuming the same multiple to 2025 revenues, Palantirs fair value would be close to $14 per share, or 75% higher than its current share price, thus Palantirs upside potential over the next two years is quite high if management executes well on its growth strategy. Read More . However, recent progress has been somewhat mixed. [9/3/2021] Is Palantir Stock A Buy At $26? Palantir Technologies gross profit for the twelve months ending September 30, 2022 was $1.438B, a 29.72% increase year-over-year. I have no business relationship with any company whose stock is mentioned in this article. Still, it's a nice drop-down from $7.8 per share - over 50%. [1]Although 30% growth isnt bad, Palantirs stock is priced for higher growth, trading at almost 35x forward revenues. Yeah, commercial revenues are on the rise, but part of the bull thesis has always been that governmental, long-cycle, massive-contract-value appeal. On September 17, Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Rep. Jess "Chuy" Garca (D-Ill.) wrote a letter to Securities and Exchange Commission Chairman Jay Clayton, urging an investigation of the company before it went public. In the year-ago period, Palantir burned $290 million in cash; thanks to growing sales, it posted $151 million in free cash flow in Q1. It needs to be added back, and this means that SBC is a drag on company profits - as any expense is supposed to be. They're wildly different businesses, and Palantir has a market capitalization of over $15B! Big data and analytics playerPalantirs stock(NYSE: PLTR) rallied by over 9% over the last week (five trading days) compared to the S&P 500 which declined by about 1% over the same period. This FAANG Stock Is Crushing It Despite Inflation, 2 Dividend-Paying Tech Stocks to Buy Right Now, 2 Phenomenal Growth Stocks With "No Downside" to Buy Now, According to Wall Street, 3 Top Tech Stocks That Could Help Make You Rich by Retirement, Cumulative Growth of a $10,000 Investment in Stock Advisor, 1 Incredible Growth Stock Down 64% to Buy Hand Over Fist, Here Are All 23 Stocks I've Bought During the 2022 Bear Market, 3 Passive Income Machines to Fund Your Retirement. 14. You either have profit, or you haven't. We think Palantir stock has a little more upside. While the stock trades at about 36x projected 2021 revenues, this is largely justified by strong growth rates (annual top-line expected to grow at 30%-plus levels through 2025), expanding margins, and new opportunities in the commercial business. Palantirs commercial business is primarily comprised of its Foundry software product which it markets as a central operating system for an organizations data, that enables users to integrate and analyze the data they need in one place. In the fantasy classic, scenes from the future or past can be viewed using the objects, but the information provided is unreliable and often used to deceive. Because this expense isn't cash, Palantir is free-cash-flow positive and sports an impressive 30% margin. I went through the results of excessive SBC in my article on Twilio (TWLO). The expectation is they will eventually earn a profit. It also hasn't posted positive GAAP EPS at any point as of this time. As I mentioned, I worked on this equation, in procurement. High stock comp in lieu of cash payments is enabling Palantir to build cash every quarter, which is good for the company's durability in this environment. A change of -6.1% or more over five trading days has a 23% event probability, which has occurred 66 times out of 286 in the last year. Commercial customers have been growing quickly. Adjusted operating margins rose to about 17% in 2020, up from negative levels in 2019 and the company also recently raised adjusted free cash flow guidance for the full year 2021, from breakeven to in excess of $150 million. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these. for more details. by hoofaman Fri May 13, 2022 10:52 am, Post Palantir offers big data and analytics solutions primarily used by governments and intelligence agencies, although it has been expanding its presence in the commercial space. Get them exclusively at iREIT on Alpha. The outlook for the commercial business should also look up, considering that Palantir is significantly hiring for sales positions and recently formed a sales partnership with enterprise computing behemoth IBM. Thiel has not publicly spoken in support of the president during the current election cycle. I saw their technology 2 years ago as part of a corporate review process. Big-data analytics company Palantir ( PLTR 10.08%) reported earnings on Monday, Nov. 7, resulting in an 11.5% drop -- the latest leg down in the stock's 70% decline over the past Palantirs revenue guidance for the full year 2021 was also lower than expected, with the company expecting sales to grow at over 30%, slowing significantly from the 47% growth rate it saw in 2020. It confirms Ben Graham's idea that the market is a voting machine in the short run. by columbia Fri Nov 13, 2020 8:30 pm, Post Separately, Palantir also has a post-IPO lock-up period expiring later this week, and this is expected to increase the number of shares available for trading. Let's ignore net income and focus on the simpler task of putting together a basic model of the operating income. With the companys Q3 earnings due on November 12, investors are likely anticipating a strong quarter. The problem is - and I want to drill this home with the sort of fervor of slamming a gavel into the tabletop again and again - you are not doing so profitably. Palantir reported first-quarter revenue of $446.4 million, above Refinitiv IBES estimates of $443.4 million, driven by strength in its U.S. commercial business. $ 15B has really changed for Palantir stock has a market capitalization of over $!! 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