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Palantir (PLTR)
- Thread starter glockman
- Start date
good price to buy in when it’s still in mid 20s.
When I saw how Palantir enables the US and our allies to fuck up the PLA, I knew I had to buy their stock. Best lah.
You are very kind to contribute to US’ national defense. The company can burn cash for 18 years and pass the losses to investors, simply brilliant. As long as CIA continue to use them they should be ok.
https://www.marketwatch.com/story/p...-cracks-analyst-says-in-downgrade-11636552230
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Shares of Palantir Technologies look on track to extend their slide Wednesday after RBC Capital Markets analyst Rishi Jaluria downgraded the stock, warning of “cracks emerging in the story.”
Jaluria is concerned about a deceleration in Palantir’s government business as shown in the company’s Tuesday morning earnings commentary. While Jaluria had anticipated a slowdown, he noted that the growth rate for this part of the business was almost cut in half relative to the second quarter.
Palantir executives called out 34% growth in government revenue during the third quarter, while this segment was up 66% in the second quarter.
“We believe Palantir got direct benefits from COVID-related spending and those benefits have already faded,” Jaluria wrote in his note to clients, while lowering his rating on Palantir’s stock to underperform from sector perform and cutting his price target to $19 from $25.
Shares of Palantir are off more than 2% in premarket trading Wednesday.
Jaluria also said that while Palantir’s commercial business continues to accelerate, he believes some of the growth there is due to a program through which the company makes strategic investments in earlier-stage businesses that then use its technology. “We do not believe revenue from SPAC investments is sustainable, especially given the relatively small size of the companies Palantir is investing in,” he wrote.
Palantir’s management team continues to expect revenue growth of at least 30% for this year and the following four years, but Jaluria views this target as “hard to underwrite” given the deceleration in the government business and his estimation of the impact that SPAC investments are having on commercial growth.
“We still believe Palantir has good technology and strong customer government relationships, but given the valuation, would like to see additional proof points of clean, sustainable 30%+ growth before getting more constructive,” he wrote.
Palantir shares have added 5.8% over the past three months as the S&P 500 SPX, -0.28% has gained 5.6%.
Palantir is starting to show ‘cracks,’ analyst says in downgrade
Published: Nov. 10, 2021 at 8:50 a.m. ETBy
Emily Bary
0
RBC highlights a sharp deceleration in government revenue and says 30%-plus overall growth target for next few years is ‘hard to underwrite’
Palantir posted third-quarter results early Tuesday.
Shares of Palantir Technologies look on track to extend their slide Wednesday after RBC Capital Markets analyst Rishi Jaluria downgraded the stock, warning of “cracks emerging in the story.”
Jaluria is concerned about a deceleration in Palantir’s government business as shown in the company’s Tuesday morning earnings commentary. While Jaluria had anticipated a slowdown, he noted that the growth rate for this part of the business was almost cut in half relative to the second quarter.
Palantir executives called out 34% growth in government revenue during the third quarter, while this segment was up 66% in the second quarter.
“We believe Palantir got direct benefits from COVID-related spending and those benefits have already faded,” Jaluria wrote in his note to clients, while lowering his rating on Palantir’s stock to underperform from sector perform and cutting his price target to $19 from $25.
Shares of Palantir are off more than 2% in premarket trading Wednesday.
Jaluria also said that while Palantir’s commercial business continues to accelerate, he believes some of the growth there is due to a program through which the company makes strategic investments in earlier-stage businesses that then use its technology. “We do not believe revenue from SPAC investments is sustainable, especially given the relatively small size of the companies Palantir is investing in,” he wrote.
Palantir’s management team continues to expect revenue growth of at least 30% for this year and the following four years, but Jaluria views this target as “hard to underwrite” given the deceleration in the government business and his estimation of the impact that SPAC investments are having on commercial growth.
“We still believe Palantir has good technology and strong customer government relationships, but given the valuation, would like to see additional proof points of clean, sustainable 30%+ growth before getting more constructive,” he wrote.
Palantir shares have added 5.8% over the past three months as the S&P 500 SPX, -0.28% has gained 5.6%.
@eatshitndie bro, the talk now is that with the recent earnings call that PLTR's government revenue is slowing. I thought they won US army contract? Or maybe that has not been factored into the numbers?
market seems to want them to transition away from govt revenue and have more commercial business as well.
Any thoughts?
market seems to want them to transition away from govt revenue and have more commercial business as well.
Any thoughts?
correct. wall street investors prefer that they start migrating to enterprise and commercial markets instead of focusing on govs and big regulatory institutions.
Some investors are skittish they have fewer govt contracts, but they have been ramping up their commercial business which I believe has more potential. Hence, can still remain bullish. Ark Invest also just bought another 1.5m shares.https://www.marketwatch.com/story/p...-cracks-analyst-says-in-downgrade-11636552230
Palantir is starting to show ‘cracks,’ analyst says in downgrade
Published: Nov. 10, 2021 at 8:50 a.m. ET
By
Emily Bary
0
RBC highlights a sharp deceleration in government revenue and says 30%-plus overall growth target for next few years is ‘hard to underwrite’
Palantir posted third-quarter results early Tuesday.
Shares of Palantir Technologies look on track to extend their slide Wednesday after RBC Capital Markets analyst Rishi Jaluria downgraded the stock, warning of “cracks emerging in the story.”
Jaluria is concerned about a deceleration in Palantir’s government business as shown in the company’s Tuesday morning earnings commentary. While Jaluria had anticipated a slowdown, he noted that the growth rate for this part of the business was almost cut in half relative to the second quarter.
Palantir executives called out 34% growth in government revenue during the third quarter, while this segment was up 66% in the second quarter.
“We believe Palantir got direct benefits from COVID-related spending and those benefits have already faded,” Jaluria wrote in his note to clients, while lowering his rating on Palantir’s stock to underperform from sector perform and cutting his price target to $19 from $25.
Shares of Palantir are off more than 2% in premarket trading Wednesday.
Jaluria also said that while Palantir’s commercial business continues to accelerate, he believes some of the growth there is due to a program through which the company makes strategic investments in earlier-stage businesses that then use its technology. “We do not believe revenue from SPAC investments is sustainable, especially given the relatively small size of the companies Palantir is investing in,” he wrote.
Palantir’s management team continues to expect revenue growth of at least 30% for this year and the following four years, but Jaluria views this target as “hard to underwrite” given the deceleration in the government business and his estimation of the impact that SPAC investments are having on commercial growth.
“We still believe Palantir has good technology and strong customer government relationships, but given the valuation, would like to see additional proof points of clean, sustainable 30%+ growth before getting more constructive,” he wrote.
Palantir shares have added 5.8% over the past three months as the S&P 500 SPX, -0.28% has gained 5.6%.
Some other investors like myself are skittish about Palantir due to the massive share dilution since a year ago. I've sold most of my Palantir stocks and put the money into Grab (AGC) instead. Word has it that the merger between Grab and the SPAC company, AGC, should be happening this quarter.
Sep. 06, 2021 8:00 AM ET
Summary
Palantir stock has been heavily diluted since it went public in a 2020 direct listing.
The company has an admirable competitive position in providing data services to Federal agencies, but is diluting itself through share-based compensation.
Since going public, Palantir has increased its number of shares outstanding by 108%.
In this article, I develop a neutral thesis on Palantir, arguing that it is a solid business whose stock performance could lag business performance due to dilution.
Palantir (PLTR) stock has been trading in a pretty narrow range lately. Bouncing between $21.50 and $26.50 ever since May, it appears to be stuck. Granted, if you'd bought at the lower end of that range, you'd be up a handsome 23% by now. But if you had bought at the all-time high of $39.58, you'd be hurting. As of this writing, PLTR stock was sitting at about $26.6, down 32% from that elevated price.
On the surface, Palantir's recent stock moves have been perplexing. Palantir's most recent earnings beat on both revenue and EPS, yet the stock has not gone anywhere near its previous highs. What are the markets thinking here?
It's not easy to say. Mr. Market can be a fickle little fellow, and his behavior isn't always dictated by fundamentals. But one thing that may be influencing Palantir's tepid performance as of late is dilution. In the third quarter of 2020, Palantir had 905 million shares outstanding. By the second quarter of 2021, that figure had grown to 1.89 billion. As I wrote in a recent Tweet, that's a greater than 100% increase in shares outstanding (1.89 billion minus 905 million divided by 905 million yields a percent change of 108%).
As of Palantir's recent earnings release, it had 1.89 billion shares outstanding - a 108% increase from the third quarter of 2020. The period covered here is the trailing 12-month period, so we're talking about share count doubling in just a year.
That's a fair amount of dilution. And it is quite likely that it is affecting the stock price. Palantir insiders are known to have unloaded stock immediately after their lockup period expired. According to Simply Wall Street, insiders sold $440 million worth of shares in the first three days of trading, and $600 million more in the week after that. So, not only are new shares being issued, they're being added to the public float. This sort of thing tends to depress stock prices because it increases the supply of shares. Unless demand increases, a stock's price will go down during a wave of insider selling.
That is why I've changed my rating on Palantir from bullish to neutral. I think that this stock probably will enjoy upside in the long run if the dilution eases off, but this year, it will be difficult for PLTR to run ahead of the selling pressure it's under. At $22, I was quite bullish on the stock, but at $26.6 I think it's near the top of the range it's likely to trade in for quite some time. Accordingly I'll develop a neutral thesis on PLTR in this article, arguing that investors are unlikely to lose their shirts on it but probably won't realize massive gains (in the short term) either.
Examining Palantir's Dilution in Detail
When we talk about a company's share count, there are three possible things we could be referring to:
Shares outstanding. The number of shares that currently exist. When calculating diluted EPS, this includes options and convertible securities.
Public float. The number of shares that are available to be publicly traded.
Fully diluted shares. The number of shares that would exist if stock options and convertible securities - including those not yet vested - were to be exercised.
In Palantir's case, these share counts are not identical. Usually, shares outstanding used for diluted EPS are the same as fully diluted shares, but Palantir's definition of "fully diluted shares" includes stock warrants that don't actually exist yet. Primarily, stock options that have been granted but won't be issued until employees hit their performance targets. The company currently has 250 million warrants that won't technically exist until employees hit these milestones. These do not make it into the company's shares outstanding count - not even in the diluted EPS calculation.
PLTR's weighted average shares outstanding as of the most recent quarter was 1.89 billion. Its float, according to FinViz, was 1.63 billion. Diluted shares were the same as shares outstanding (1.89 billion) in the Q2 press release, although an earlier filing suggests that the count reaches 2.17 billion if you include options and warrants that can't be exercised until way later. If you add 250 million to 1.89 billion, you get to 2.14 billion - almost the same as the fully diluted share count. This corroborates my theory that the un-vested warrants account for the difference between shares outstanding and fully diluted shares.
Based on these numbers, we can evaluate how much Palantir's equity has been diluted in the past four quarters.
As mentioned earlier, shares outstanding has gone from 905 million to 1.89 billion, a 108% increase. PLTR had as few as 574 million shares in 2019. We've seen a 229% increase since then - but that count is from before PLTR was public, so is immaterial to this discussion.
Estimates of Palantir's float range from 1.53 billion to 1.68 billion according to floatchecker.com. Since Palantir is a recent listing, the count is up from zero. At least $1.04 billion worth of shares were added to the float right after the listing, because that's the number of shares unloaded by insiders in the first 10 days of trading.
Fully diluted shares probably haven't increased as much as either shares outstanding or float. Companies aren't under any obligation to report "granted but not vested" employee stock options, and Palantir hasn't done so since its prospectus. However, Palantir's stock compensation expense has decreased since it went public, so the number is likely growing slower than it had been previously.
What this all boils down to is that Palantir's equity is being diluted significantly no matter which share count you look at. Shares outstanding, float, it's all up. With that said, we may have seen the worst of this. As mentioned already, the amount of stock-based compensation is going down. One analyst forecast future dilution of 4% per year, which is far outpaced by Palantir's revenue growth.
Palantir's Recent Earnings
As we've seen already, Palantir has been seeing some serious dilution brought on by stock-based compensation. It is what it is. The good news is that Palantir's revenue and EBITDA are growing at a rapid pace, and may ultimately grow faster than the number of shares.
For the most recent quarter, Palantir posted the following results:
Revenue: $376 million, up 49%.
Total contract value: $925 million, up 175%.
Net new customers: 20, up 13% quarter-over-quarter.
Gross profit: $90 million, up 32%.
Cash from operations (six-month): $139 million, up from a $226 million outflow.
As you can see, many of Palantir's key financial and operating metrics improved considerably in Q2. GAAP diluted EPS was still a loss at $-0.07, although adjusted EPS was positive at $0.04. If EPS were to stay at $0.04 for the next three quarters, then we'd end up with $0.16 in annualized EPS. That yields a 166 P/E ratio. The price/operating cash flow ratio is even higher at 374. Not exactly cheap.
However, we need to account for Palantir's growth potential. Since going public, Palantir has managed to maintain revenue growth in the high 40% to low 50% range. If EPS could grow in line with revenue, then we'd have an ever increasing adjusted EPS figure taking the multiple lower based on today's price. Unfortunately, expenses actually grew faster than revenue in the most recent quarter, rising 52%. For the six-month period, expenses grew even more, at 57%. Now, according to analyst Michael Page, dilution is expected to run at about 4% per year for the foreseeable future. We have got revenue running well ahead of that rate, but on the other hand, there is no clear trend of operating profitability. So it's a very mixed picture we're seeing here - hence my neutral rating on the stock.
Risks and Challenges
As we've seen, Palantir is a fast-growing stock with some major dilution on its hands. In my view, it's going to perform about in line with the market, or keep trading in its established range, in the near term. But there are some risks and challenges even to this fairly tepid thesis. They include:
Continued growth in expenses. Palantir's expenses have been growing faster than its revenue lately. A lot of these expenses are stock compensation - hence cash flow being positive while operating earnings are negative - but they are expenses nonetheless. We expect companies to lose money when they're fresh out of their IPO but this is a company with 17 years of pre-IPO history. We'll want to see that stock compensation expense come down.
The stock options vs. cash pay catch-22. Palantir has so far managed to keep its operating cash flows positive by paying employees in stock options rather than heavy amounts of cash. If the company aims to get its dilution down to 4% a year, then it will probably have to start paying employees more salary. That will cause dilution to ease off but also eat into operating cash flow and related metrics like free cash flow.
Competition. Palantir has a pretty solid moat in its core business of providing data software to large government agencies. But it faces stiff competition when reaching out to private sector clients. The companies offering data platforms to private businesses are legion. And this is where Palantir needs to look to fuel future growth because there are only so many Department of Defense contracts to go around.
The Bottom Line
The bottom line on Palantir is this:
It's a high growth business that unfortunately is seeing its expenses grow every bit as much as its revenue. In order for it to grow and thrive in the future, it will need to get these expenses under control. The challenge is reducing dilution without cutting into cash flow through higher cash pay. If the company can get dilution down to 4% as estimated above, maybe this dilemma won't matter so much. But if it keeps running at 100% a year? We've got a problem on our hands.
https://seekingalpha.com/article/4453687-palantir-stock-dilution-real
Thanks for the info and for the Grab/AGC tip. I will still hold on to all my PLTR shares, this company has tons of growth potential. It's not a high conviction stock to me, but enough conviction lah.
Thanks for the info and for the Grab/AGC tip. I will still hold on to all my PLTR shares, this company has tons of growth potential. It's not a high conviction stock to me, but enough conviction lah.
Grab/AGC had been hovering around US$10 - 11 for a while. Recently, it ran up to US$15 on the rumour of the impending delayed merger of Grab/AGC.
PLTR does have potential as long as management doesn't keep diluting existing shareholders to reward their key players. That's my guess why PLTR can't break the US$27 barrier.
AGC can be a buy at about $11-$12.
Grab/ AGC just had a slightly disappointing Q3, thanks to covid lockdowns in ASEAN markets. In the long run, I think Grab will beat Indonesia's GoTo. But that's my personal opinion. I personally know Grab's chief towkay, and he's a like-minded guy just like me.
Aha so you got the inside scoop! Please share share as and when, I won't tell and I'll be eternally grateful. *wink*
The Grab towkay is from a good background. Very reliable!
i have held this stock for 3.69 years. it’s finally starting to creep to $29 with the ai surge. hopefully by the 6.9th year of ipo in 2026.9 it will surge to $69.
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Sounds like this. Will investors kena "bua gu you" (spread butter) and incur huge losses?
Palantir Technologies Stock Surged Again Today. Is It Too Late to Buy the Red-Hot Artificial Intelligence (AI) Growth Stock?
Danny Vena, The Motley FoolThu, March 7, 2024 at 4:25 AM GMT+9·2 min read
Palantir Technologies (NYSE: PLTR) jumped again on Wednesday, adding to its growing win streak. The stock was up as much as 12.3% in early trading and as of 1:50 p.m. ET was still up 11%.
While the upward trajectory of the broader market no doubt helped fuel the gains, the clear catalyst that sent the data mining and artificial intelligence (AI) specialist higher was news the company beat out the competition for a major Army contract.
Palantir was awarded a contract worth $178.4 million to deliver 10 Tactical Intelligence Targeting Access Node, or TITAN systems, which use sensor data to locate targets. However, the contract could be much more lucrative. As my colleague Lou Whiteman pointed out, the initial 10 systems could lead to 100 to 150 more.
The company has a long history of providing AI solutions to the U.S. government and its allies, so this is just the latest in a long line of contract wins.
Is Palantir Technologies stock still a buy?
While this news is welcome, investors should be more excited about another aspect of Palantir's business. The company adapted its existing AI systems to serve the needs of enterprise businesses. The ability of AI to detect patterns buried deep in data has vast implications for large companies. It can help manage inventory levels, suggest product revisions, or detect troubling trends in customer service calls, among many other applications.The advent of generative AI is right up Palantir's alley, and the company quickly developed a solution to address the increasing demand. In the fourth quarter, this boosted results, as U.S. commercial revenue grew 70% year over year, while its total contract value soared 107%.
Palantir Technologies stock has gained a whopping 215% over the past year and is already up 55% year to date. As a result, traditional valuation metrics look stretched. The stock is selling for 80 times forward earnings and 22 times forward sales, but that doesn't factor in Palantir's impressive growth. Using the more appropriate forward price/earnings-to-growth ratio reveals a valuation of less than 1, the standard for an undervalued stock.
If the demand for AI continues to grow, and I believe it will, Palantir's experience in the field could reap big rewards for the company -- and its investors.
https://finance.yahoo.com/news/palantir-technologies-stock-surged-again-192516507.html
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