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. 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. Since October 2020, Palantirs stocks 1-year return has outperformed a number of the worlds most popular media and tech companies: DIS, AAPL, TSLA, Stocks tumble, Apple slides as China COVID protests spook investors to start week Luke Lango will reveal how you could start collecting cash payouts like $4,600 in 48 days or $12,000 in 21 days, without touching risky options or any other confusing investments. COO Sankar said, We have a very unique opportunity and a diverse footprint that we believe continues to uniquely position us deliver on the necessary transformation in healthcare delivery from operational excellence to complex clinical care.. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Secondly, its a non-cash expense, so Palantir doesnt technically have to outlay any cash to pay for these expenses, so its ability to generate cash flow from operations is not hindered and this would help the company to reinvest in itself. Motley Fool Palantir Is Starting 2023 With A Bang With good data and the right technology, people and institutions today can still solve hard problems and change the world for the better. Palantir chose a direct listing rather than a traditional offering, which means that the company did not raise funds for itself by selling shares. Instead, existing shareholders were able to sell and liquidate their shares on the open market. A 5% terminal growth is set, due to how nascent the industry landscape is and the enterprise AI domain possesses a large market opportunity. Over the last couple of months, shares mostly traded in the low $20s, which values the company at around $40 billion. 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. And, the point is that an increase in share count is more like friction than a full stop. 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. In fact, based on the companys FCF projections. 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. Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 its. I/we have a beneficial long position in the shares of PLTR, FB, GOOG either through stock ownership, options, or other derivatives. 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. The Investment Community where "Cash Flow is King". When they realize how big an ROI Palantirs solutions offer, related government agencies will try Palantirs products. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. All rights reserved. MSFT is the only "cannibal" of this bunch. Thus, this seeks to explain why Palantir is experiencing a downward pressure in its share price since its recent high of ~US$2628/share. The stock has a 52-week high of $45 and a 52-week low of $14.40. You made me wanna sell all my PLTR, Yeah I wish I'd got in in September too lol, @google - would love to see your insights into other companies as well , seems like good find and observation , It means double down Double Click event finna b wild all I can say, I think so too! Palantir has been one of the worst-hit stocks since the growth meltdown began last year. MULN Stock Alert: Does Mullen Have 3,000 Preorders For Its FIVE EV? For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate., Invest Like a Pro with Unique Data & Simplifed Tools, Mohamed El-Erian Says the Stock Market Rally Could Be Short-Lived; Here Are 2 Strong Buy Dividend Stocks for Stable Cash Return, Boost Your Passive Income; 3 Stocks with 50+ Years of Dividend Growth. Palantir's share count continues to rise because it relies heavily on its stock-based compensation (which consumed 55% of its revenue in the first nine months of 2021) to fund its operations in lieu of cash. 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. The truth probably lies somewhere in between. Intuitively, we don't like it, but it's hard to see at a glance. He shares his stock picks so readers get original insight that helps improve investment returns. Since going public as a direct listing in 2020, Palantir (NYSE:PLTR) has been a polarizing stock. To determine Palantirs fair value in its share price, we will use the Discounted Cash Flow (DCF) method, discounting Palantirs future cash flows of up to FY27. for Palantir. Making the world smarter, happier, and richer. Due to the fact that a high-growth company also has many I have no business relationship with any company whose stock is mentioned in this article. 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. So today, I'll take a look at five red flags that might limit Palantir's near-term gains. Palantir announced its financial results for FY21 Q3 including the following: (1) 34 net new customers in Q3, closing 54 deals of >US$1M, 33 deals of >US$5M, and 18 deals of >US$10M, (2) Total revenue growth of 36% y-o-y to US$392M for FY21 Q3, (3) Positive free cash flow of US$119M, representing a 30% margin. Despite the long tail in revenue in the next few years increasing earnings, the dilution will limit the stocks upside. I am an investor, entrepreneur, father, husband, coach and teacher. TipRanks is a comprehensive research tool that helps investors make better, data-driven investment decisions. One of, if not THE most heavily compensated CEO of any US company in 2021. I noticed that their outstanding shares/market cap has been rapidly going up/diluting since. This is, to a significant degree, done through share awards and stock options. has been a polarizing stock. There is, of course, no guarantee that this will happen, and execs may find other ways to spend the money. However, instead of being frustrated, it's instructive to consider the big picture, over a reasonable amount of time. Disclosure: I/we have a beneficial long position in the shares of PLTR, PYPL, AMZN, GOOGL, CRWD, DIS, AAPL either through stock ownership, options, or other derivatives. (Cognitive Computing) For example, after the Q2 2021 Earnings Call, I wrote: Stock based compensation increased. Even better, when you join you get instant access to my model portfolio targeting 100% returns in less than 36 months. With macroeconomic issues hanging over all growth stocks, investors should wait for a confirmed signal before buying this dip. For example, Palantir is helping the National Health Service (NHS) analyze information for millions of patients. 2023 InvestorPlace Media, LLC. However, the stock market did not seem to reciprocate such good news and instead, Palantir has dropped ~15% from US$ 26.75 to US$22.83 as of 15th Nov 2021. Now that shares are down slightly, Palantir is a stock to consider again. Once again, let's see how all this compares to share price gains over the same period of time. 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 soared from $9-$10 levels in September 2020 (when it debuted on the exchanges) to $45 by January 2021. Is This an Income Stream Which Induces Fear? SHARE THIS POST I have no business relationship with any company whose stock is mentioned in this article. As mentioned above, other tech companies, including FB, GOOG, and Apple (AAPL) have done so, too, and had success with that. I appreciate your feedback, comments and questions. Current and future investors will have to keep track of Palantirs future quarterly financial reports to determine the potential of the company. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. ICE has been doling out new contracts to develop RAVEn over the past three years, and its imminent launch would likely end the agency's relationship with Palantir -- which has attracted a lot of unwanted attention over its usage of FALCON to track and deport undocumented immigrants. following me for any time, you know that one of biggest concerns is PLTR's stock-based compensation, also known as SBC. Now, let's ignore share count just for a moment. Palantir can implement solutions quickly. I'll Avoid These Sectors In 2023 3:39AM ET 1/15/2023 Seeking Alpha. Palantir is a high-growth company that operates worldwide in both commercial and government segments. Fair Value is the appropriate price for the shares of a company, based on its earnings and growth rate also interpreted as when P/E Ratio = Growth Rate. Of particular concern was the approximately 17.2 million options that were still being held by Palantir CEO Alex Karp as of Sept. 30. Google. The Motley Fool has a disclosure policy. 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. The DCF valuation employs the Free Cash Flow to the Firm (FCFF) methodology to arrive at the intrinsic value of the company. Does it make it a bad investment? Please. I write about venture capital, equity research, and data analysis. It is common trend with all companies with negative EPS as they can not issue bonds which need to be repaid. 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