We have war fighters who follow our nutrition. Palantir is a high-growth company that operates worldwide in both commercial and government segments. In total, Palantir grew revenue by 36% year-over-year to $392 million. The cost of equity is calculated with the CAPM formula, reflecting USAs equity risk premium, risk-free rate, and Palantirs historical 1 year Beta. Gross margins are stronger than the S&P 500 average. 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. Palantir has customers in the mobility space that includes original equipment manufacturers (OEM), their suppliers, EV charging companies, and insurers. *Average returns of all recommendations since inception. Google. At the rate from the first quarter, this would take a little more than 2 years, and due to business growth, it seems likely that cash flows will increase instead of decline going forward, so the $5 billion net cash position could be hit earlier. 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. As for me, I have to admit that PLTR stock is starting to look a lot more attractive at this price. Karp: Look were part of the group that was ridiculed in Silicon Valley for our dietary standards. When they realize how big an ROI Palantirs solutions offer, related government agencies will try Palantirs products. eBay, Go to company page Since then, it has fallen to trade at $18-$19 levels. Stock Prodigy Who Found NIO at $2 Says Buy THIS Now, Man Who Called Black Monday: Prepare Now.. TipRanks is a comprehensive research tool that helps investors make better, data-driven investment decisions. Insider sales are hurting shareholders. And, it's also a powerful recruiting and retention tool. And, that's why I emphasized adjusted numbers in Palantir: The Rule Of 40. And the companys overall revenue was up 36% YOY at $392 million. Theres likely a few reasons for Palantir to favour SBC over salary. Thanks for pointing this out. Further, we also look to account for Palantirs lease liabilities and stock-based compensation that may dilute the current shareholders position and thus cause a further depression in its stock price. they should be getting. The stock has a 52-week high of $45 and a 52-week low of $14.40. 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. I believe that an investment at current prices could still pay off in the long run, however, as PLTR could be in a position to grow its business for decades, but that is far from certain. 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%. We must not let PLTR off the hook. SHARE THIS POST News / Events / Financials. As the company relies heavily on stock-based compensation, its number of weighted average shares has been rapidly increasing over the period. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. The Upside Potential for SOFI Stock Is Limited. Following which, we can identify that Palantir will be growing at a 32.9% CAGR from US$1.5B in FY21 to US$8.4B in FY27 (hitting the target of US$5B at FY25 too). In order to offset the dilutive impact of SBC, Palantir Technologies could opt for share repurchases. 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. Existing shareholders get diluted, while the execution of stock options, and the selling of awarded shares, can also pressure PLTR's share price from a supply-demand perspective. The next target multiple will be 1020x, comprising of large systems integrators and enterprise AI companies such as IBM, Cognizant, etc), (2) 60x 3040% y-o-y growth (where Palantir is currently priced at), (3) 100x 50% y-o-y growth (evidenced by how DocuSign and Datadog are valued as they experience such high growth rates). However, this secretive software firm that Despite these weaknesses, I remain bullish on Palantirs future. I wrote this article myself, and it expresses my own opinions. So while there will likely continue to be some selling in the next few years, investors may have to find something else to object to. These options were set to expire on Dec. 3, 2021. 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. Turning to Wall Street, PLTR stock has a Moderate Sell consensus rating. And the companys overall revenue was up 36% YOY at $392 million. I am an investor, entrepreneur, father, husband, coach and teacher. Stocks tumble, Apple slides as China COVID protests spook investors to start week First, I explain how stock-based compensation or "SBC" is my #1 complaint about Palantir. Currency in USD Follow 2W 10W 9M 6.96 -0.05 (-0.71%) At close: January 13 04:00PM EST 6.94 -0.02 (-0.29%) Palantir has massively diluted its shareholders whereas Datawalk has just gradually issued shares over time. I am not receiving compensation for it (other than from Seeking Alpha). Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. Right now is the perfect time to subscribe because it's affordable for any budget. Due to the fact that a high-growth company also has many In 2004, when we looked at the available technology, we saw products that were too rigid to handle novel problems, and custom systems that took too long to deploy and required too many services to maintain and improve. Palantir revenue has been increasing over the years. Copyright 2023 InvestorPlace Media, LLC. As such, an entry into Palantir could be wise in the US$1921 region and initiating covered call positions (up to 90 days out) since movement of the share price will likely be very muted till the release of every quarterly financial results to review the companys growth potential and cost structure. Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. It is said that back in 2011, the U.S. Army had reportedly used Gotham to track down Osama Bin Laden. One of, if not THE most heavily compensated CEO of any US company in 2021. 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. Palantir has never been a profitable companysince its inception. Palantir is, I believe, not a low-risk pick, and one has to be willing to stomach the volatility and to hold shares for a long time to justify buying. Palantir specializes in big data analytics. 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 Join today for less than $2 per day. There's no dilution happening, they aren't issuing new shares. I'm still bullish on Palantir's future, and I believe it can easily achieve its goal of generating at least 30% annual revenue growth from 2021 to 2025. ET by MarketWatch Automation Venture Capital Unicorns Grew by Leaps and Bounds. Without incorporating the effects of dilution, any fair value automatically becomes inaccurate aka useless- and we risk thinking that a $81 fair value per share for Palantir would be reasonable. I remain bullish. Let's use the same basic approach to look at three more companies. Now that shares are down slightly, Palantir is a stock to consider again. The Motley Fool has a disclosure policy. In fact, based on the companys FCF projections. Palantir had a share price of $30. Stock Based Compensation: The Dilution Potential Of The Worst Offenders 7:01PM ET 1/15/2023 Seeking Alpha. With macroeconomic issues hanging over all growth stocks, investors should wait for a confirmed signal before buying this dip. Palantir's stock is also down by 84% from its all-time Since going public as a direct listing in 2020, Palantir (NYSE:PLTR) has been a polarizing stock. 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. Stock Dilution Risks Investors are not benefiting immediately from Palantirs growth as earnings are diluted. 1125 N. Charles St, Baltimore, MD 21201. 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. Palantir has a strong moat that gives customers an edge. Subscribe right now because you get 14 days for FREE. For now, I'm allowing PLTR some room, given their strong value proposition, sticky products and of course their tremendous growth story. PLTR stock already tripled since its initial public offering. for Palantir. We essentially have built a food ontology that provides nutrition in mission critical systems. Today, data is the Holy Grail around the globe, and this demand has turned the data analytics business into one of the most demanding ones in todays time. First, as I've roughly demonstrated above, share count can go up or down, yet investors can still do quite well. It also announced it would accept payment in. First, the company is growing its commercial revenue. Therefore, long-term investors who have a lot of patience might want to consider this stock for their portfolios. I am bullish on PLTR stock. Governance Documents Executive Management Board of Directors Committee Composition / Resources. Further, CEO Alex Karp posited a 40% revenue growth for FY21 and a sustained 30% y-o-y growth up to FY25. If you have an ad-blocker enabled you may be blocked from proceeding. Is this happening to you frequently? 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. I have no business relationship with any company whose stock is mentioned in this article. ET. Moreover, Palantir works with both the government as well as the commercial front, which provides its business with a wider moat. 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. I appreciate your feedback, comments and questions. In its SEC filings, the company says its long-term goal is to make Gotham, its data mining platform, which serves dozens of government agencies, the "default operating system for data across the U.S. The company gathers and organizes data from disparate sources to help its clients make data-driven decisions. I have no business relationship with any company whose stock is mentioned in this article. If you have an ad-blocker enabled you may be blocked from proceeding. Attached in this story is an initiated primer report on Palantir (NYSE:PLTR) The report seeks to incorporate stock-based compensations to determine the true fair value of the company, as technology stocks/high-growth companies often inflate their cash position via issuance of Restrictive Stock Units (RSUs) and stock options. Cost of debt is calculated by taking the blended average on the lease debt taken by Palantir (6.35%) and credit facilities (2.75%) and adding the 10-year risk free rate. That growth, combined with strong margins and cash flow, ought to translate to share price gains despite the friction and grind. 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. Compensation for it ( other than from Seeking Alpha and know-your-customer expertise companys overall revenue was up 36 YOY! 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