Palantir: Too Good To Sell, Too Pricey To Buy

Seeking Alpha12-24 16:12

SummaryPalantir's aggressive revenue growth, solid operating leverage, and strong AI market tailwinds make it fundamentally robust and promising for long-term investors.However, the stock might face a...

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KNandall
12-24 22:55
KNandall
I guess it will reach $100 mark

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AI tailwinds are strong as governments and business are striving to make their decision-making processes more data-driven.Statista is a reputable source, and it projects the global AI market will see a robust 28.5% CAGR between 2024 and 2030. With that being said, industry tailwinds are highly likely to remain strong for Palantir for at least the next six years.StatistaAs readers can see ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"translate_title":"Palantir：太好卖，太贵买","themeId":"bce8c69bbdf4856a3982f83e62e4bd79","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PLTR":1.1},"content_text":"SummaryPalantir's aggressive revenue growth, solid operating leverage, and strong AI market tailwinds make it fundamentally robust and promising for long-term investors.However, the stock might face a bumpy road in early 2025 due to historically weak seasonal patterns in the first few months.I believe a 4% upside potential is not particularly attractive, especially given the recent aggressive insider selling.IntroductionMy August 24 rating downgrade to 'Hold' for Palantir gives me mixed feelings. On the one hand, the stock price spiked from $31 to $80 since my previous call. On the other hand, a 'Hold' is not a 'Sell' and I only regret that I did not buy more back in August. Still, I enjoyed this massive rally of the last four months, and I reiterate my 'Hold' rating.My analysis places significant emphasis on valuation because fundamentally, the company continues moving in line with its aggressive growth strategy. The ability to deliver on business promises makes me extremely bullish about PLTR overall, but valuation matters the most after such an aggressive bull run.Fundamental analysisIt is always the same over the long term - the ability to drive aggressive revenue growth coupled with the operating leverage is a powerful fundamental combination. Palantir is an absolute powerhouse from this perspective.Data by YChartsPalantir's year-over-year revenue growth has been accelerating aggressively over the last several quarters, which reached 30% in Q3 2024. Such an aggressive revenue growth acceleration is accompanied by a rock-solid operating leverage. Palantir's GAAP operating income has almost tripled over the last five quarters, which is a remarkable achievement.PLTRFor how long will such a bullish P&L dynamic last? It is highly likely that Palantir will be able to maintain such a stellar trajectory for a prolonged period. AI tailwinds are strong as governments and business are striving to make their decision-making processes more data-driven.Statista is a reputable source, and it projects the global AI market will see a robust 28.5% CAGR between 2024 and 2030. With that being said, industry tailwinds are highly likely to remain strong for Palantir for at least the next six years.StatistaAs readers can see above, Machine Learning is by far the largest segment of the AI industry, and it will contribute the most to the projected market growth. Therefore, we can expect the company to continue driving aggressive revenue growth, especially thanks to its Artificial Intelligence Platform ('AIP'). Moreover, innovation and improving value for customers remain the core of Palantir's growth strategy as the company has been aggressively ramping up its R&D spending in recent quarters.Data by YChartsThe reason why I am highly convinced in Palantir's ability to demonstrate more operating leverage is the company's proven track record of cross-selling. Palantir's net dollar retention was 118% in Q3 2024, a level suggesting that the company is strong in cross-selling. Moreover, the company is quite strong in driving growth across its large contracts.PLTRPalantir is also very well-prepared to drive inorganic growth. The company currently boasts a $4.6 billion cash position and PLTR is almost free of debt. Such a clean balance sheet positions the company well for potential M&A deals, which might unlock new revenue growth opportunities and synergies. Moreover, the number of shares issued has been quite stable over the last few quarters, which is also beneficial for investors.Yahoo FinanceOn the other hand, there are some temporary setbacks on the horizon as well. Palantir is relatively young as a public company and the stock's seasonal patterns might not be enough representation, but I have to warn readers that success-rates are quite low for January-May for PLTR. The stock usually performs much better in the second half of a year, with January-May success rates not higher than 50%. April even has a very disappointing zero percent success rate.SAFurthermore, PLTR's insiders have been selling the stock quite aggressively in recent months. The number of shares bought was also substantial, but still insiders were selling notably more than buying. Aggressive insider selling is rarely a good catalyst for the share price.NasdaqOverall, there are some temporary setbacks on the horizon for the share price, but they will only matter in the short term. Over the long term, my conviction in Palantir's ability to drive value for shareholders remains extremely high.Valuation analysisPalantir's 2024 estimated P/E ratio of 212 is extremely high, but I always prefer to look at the trajectory. Since PLTR demonstrated strong operating leverage in recent years, and it has bright revenue growth prospects, the P/E ratio is expected to shrink significantly over the next few years.SAOf course, a 111 estimated FY2027 forward P/E ratio might also look very high for conservative investors. But picture this, Amazon's average P/E ratio between 2009 and 2019 was jaw-dropping 325. Nevertheless, due to Amazon's aggressive business expansion, its stock price has multiplied several times over the same period. Palantir is one of the biggest AI winners, so I think such a high forward ratio is well-deserved.Data by YChartsMoreover, PLTR's DCF model looks good as well. The WACC I have used to discount future cash flows is 8%. The large sample of Wall Street analysts covering PLTR's revenue projections for FY2025-2026 makes consensus a reliable source for the first two years of my DCF. For FY2027-2029, I apply a slight 25-basis points yearly growth deceleration. PLTR's levered FCF margin is 29.64%. Due to historical solid operating leverage, I expect the metric to improve by 100-basis points every year.The constant growth rate is usually a big topic for discussion in comments, and this is the reason why I want to elaborate extensively here. My constant growth rate for PLTR is 7%, which aligns with my previous PLTR DCF. Since I have already mentioned Amazon when discussing the P/E ratio, I want to inform readers that Amazon delivered a staggering 74% revenue CAGR since the late 1990s.Aggressive R&D spending and M&A activities helped Amazon to significantly outpace the growth of the U.S. economy. In fundamental analysis, I explained why Palantir is also very well-equipped to drive both organic and inorganic growth.Data by YChartsSome readers might say that Amazon is not representative enough because it is an absolutely unique company that was able to maintain dominance across two megatrends of recent decades: e-commerce and cloud. Okay, below are examples of companies that are not as dominant as Amazon. Oracle was able to deliver a 27.5% revenue CAGR since the early 1980s! Cisco is a little bit younger as a public company, and its revenue CAGR is even higher at 40.4%.Data by YChartsTherefore, I believe that Palantir's 7% constant growth rate is sound. According to Seeking Alpha, there are 2.28 billion PLTR shares outstanding. Incorporating all assumptions into the DCF model returns the fair share price of $83.53.A 4% upside potential does not look very attractive, especially after the aggressive rally of the last few months.Calculated by the authorMitigating factorsWhen investors witness a bull run like Palantir delivered in 2024, the FOMO effect is inevitably high. Moreover, PLTR is not some meme-stock or a 'pump-and-dump' story. The business is fundamentally robust, and the AI momentum remains solid, which makes the FOMO effect even stronger.SATherefore, despite my cautious stance and the overall 'Hold' rating for PLTR across various sources, the power of momentum might prevail over the short term. If the stock approaches and surpasses the significant $100 psychological level, it could very likely trigger another massive rally — one that might leave me regretting not adding more shares to my position.ConclusionI reiterate a 'Hold' rating because the remaining upside does not look worth the risk. At the same time, a wonderful company like Palantir can easily deliver new big positive surprises, and I am unwilling to sell my current notable PLTR holding.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":385192303091840,"gmtCreate":1735052151460,"gmtModify":1735052155530,"author":{"id":"4183075228968692","authorId":"4183075228968692","name":"KNandall","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4183075228968692","authorIdStr":"4183075228968692"},"htmlText":"I guess it will reach $100 mark&nbsp;","listText":"I guess it will reach $100 mark&nbsp;","text":"I guess it will reach $100 mark","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/385192303091840","repostId":1177136433,"repostType":2,"repost":{"id":"1177136433","kind":"news","pubTimestamp":1735027950,"share":"https://ttm.financial/m/news/1177136433?lang=&edition=fundamental","pubTime":"2024-12-24 16:12","market":"us","language":"en","title":"Palantir: Too Good To Sell, Too Pricey To Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1177136433","media":"Seeking Alpha","summary":"It is highly likely that Palantir will be able to maintain such a stellar trajectory for a prolonged period. AI tailwinds are strong as governments and business are striving to make their decision-making processes more data-driven.Statista is a reputable source, and it projects the global AI market will see a robust 28.5% CAGR between 2024 and 2030. With that being said, industry tailwinds are highly likely to remain strong for Palantir for at least the next six years.StatistaAs readers can see ","content":"<html><head></head><body><h2 id=\"id_2552753409\">Summary</h2><ul style=\"\"><li><p>Palantir&#39;s aggressive revenue growth, solid operating leverage, and strong AI market tailwinds make it fundamentally robust and promising for long-term investors.</p></li><li><p>However, the stock might face a bumpy road in early 2025 due to historically weak seasonal patterns in the first few months.</p></li><li><p>I believe a 4% upside potential is not particularly attractive, especially given the recent aggressive insider selling.</p></li></ul><h2 id=\"id_533238835\">Introduction</h2><p>My August 24 rating downgrade to &#39;Hold&#39; for <a href=\"https://laohu8.com/S/PLTR\">Palantir</a> gives me mixed feelings. On the one hand, the stock price spiked from $31 to $80 since my previous call. On the other hand, a &#39;Hold&#39; is not a &#39;Sell&#39; and I only regret that I did not buy more back in August. Still, I enjoyed this massive rally of the last four months, and I reiterate my &#39;Hold&#39; rating.</p><p>My analysis places significant emphasis on valuation because fundamentally, the company continues moving in line with its aggressive growth strategy. The ability to deliver on business promises makes me extremely bullish about PLTR overall, but valuation matters the most after such an aggressive bull run.</p><h3 id=\"id_3452574355\">Fundamental analysis</h3><p>It is always the same over the long term - the ability to drive aggressive revenue growth coupled with the operating leverage is a powerful fundamental combination. Palantir is an absolute powerhouse from this perspective.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/08c4373bde7081bc222c286a1278f8dd\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"424\"/><span>Data by YCharts</span></p><p>Palantir&#39;s year-over-year revenue growth has been accelerating aggressively over the last several quarters, which reached 30% in Q3 2024. Such an aggressive revenue growth acceleration is accompanied by a rock-solid operating leverage. Palantir&#39;s GAAP operating income has almost tripled over the last five quarters, which is a remarkable achievement.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4b1601ffc4bfb8b464ad35392dcdf383\" alt=\"PLTR\" title=\"PLTR\" tg-width=\"640\" tg-height=\"642\"/><span>PLTR</span></p><p>For how long will such a bullish P&amp;L dynamic last? It is highly likely that Palantir will be able to maintain such a stellar trajectory for a prolonged period. AI tailwinds are strong as governments and business are striving to make their decision-making processes more data-driven.</p><p>Statista is a reputable source, and it projects the global AI market will see a robust 28.5% CAGR between 2024 and 2030. With that being said, industry tailwinds are highly likely to remain strong for Palantir for at least the next six years.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4a7204b9ff143ceaa995d078ec7fb156\" alt=\"Statista\" title=\"Statista\" tg-width=\"640\" tg-height=\"390\"/><span>Statista</span></p><p>As readers can see above, Machine Learning is by far the largest segment of the AI industry, and it will contribute the most to the projected market growth. Therefore, we can expect the company to continue driving aggressive revenue growth, especially thanks to its Artificial Intelligence Platform (&#39;AIP&#39;). Moreover, innovation and improving value for customers remain the core of Palantir&#39;s growth strategy as the company has been aggressively ramping up its R&amp;D spending in recent quarters.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c47e5f9b0c494ffe5367c59d09533625\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"424\"/><span>Data by YCharts</span></p><p>The reason why I am highly convinced in Palantir&#39;s ability to demonstrate more operating leverage is the company&#39;s proven track record of cross-selling. Palantir&#39;s net dollar retention was 118% in Q3 2024, a level suggesting that the company is strong in cross-selling. Moreover, the company is quite strong in driving growth across its large contracts.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c254283b97cba8e8000a42c5896d0569\" alt=\"PLTR\" title=\"PLTR\" tg-width=\"640\" tg-height=\"308\"/><span>PLTR</span></p><p>Palantir is also very well-prepared to drive inorganic growth. The company currently boasts a $4.6 billion cash position and PLTR is almost free of debt. Such a clean balance sheet positions the company well for potential M&amp;A deals, which might unlock new revenue growth opportunities and synergies. Moreover, the number of shares issued has been quite stable over the last few quarters, which is also beneficial for investors.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0db5e08be8715dcf15433c6b8aa509a0\" alt=\"Yahoo Finance\" title=\"Yahoo Finance\" tg-width=\"640\" tg-height=\"678\"/><span>Yahoo Finance</span></p><p>On the other hand, there are some temporary setbacks on the horizon as well. Palantir is relatively young as a public company and the stock&#39;s seasonal patterns might not be enough representation, but I have to warn readers that success-rates are quite low for January-May for PLTR. The stock usually performs much better in the second half of a year, with January-May success rates not higher than 50%. April even has a very disappointing zero percent success rate.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a9de9e3ce50f0ee918fd9022206412e0\" alt=\"SA\" title=\"SA\" tg-width=\"520\" tg-height=\"266\"/><span>SA</span></p><p>Furthermore, PLTR&#39;s insiders have been selling the stock quite aggressively in recent months. The number of shares bought was also substantial, but still insiders were selling notably more than buying. Aggressive insider selling is rarely a good catalyst for the share price.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8a935f67fd526052478b0dc89da179e0\" alt=\"Nasdaq\" title=\"Nasdaq\" tg-width=\"640\" tg-height=\"348\"/><span>Nasdaq</span></p><p>Overall, there are some temporary setbacks on the horizon for the share price, but they will only matter in the short term. Over the long term, my conviction in Palantir&#39;s ability to drive value for shareholders remains extremely high.</p><h3 id=\"id_3069869769\">Valuation analysis</h3><p>Palantir&#39;s 2024 estimated P/E ratio of 212 is extremely high, but I always prefer to look at the trajectory. Since PLTR demonstrated strong operating leverage in recent years, and it has bright revenue growth prospects, the P/E ratio is expected to shrink significantly over the next few years.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d897c66f05485795a6c378d0b5d15803\" alt=\"SA\" title=\"SA\" tg-width=\"640\" tg-height=\"335\"/><span>SA</span></p><p>Of course, a 111 estimated FY2027 forward P/E ratio might also look very high for conservative investors. But picture this, Amazon&#39;s average P/E ratio between 2009 and 2019 was jaw-dropping 325. Nevertheless, due to Amazon&#39;s aggressive business expansion, its stock price has multiplied several times over the same period. Palantir is one of the biggest AI winners, so I think such a high forward ratio is well-deserved.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/51cafe26a9e78600df2d8c485173c9a6\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"439\"/><span>Data by YCharts</span></p><p>Moreover, PLTR&#39;s DCF model looks good as well. The WACC I have used to discount future cash flows is 8%. The large sample of Wall Street analysts covering PLTR&#39;s revenue projections for FY2025-2026 makes consensus a reliable source for the first two years of my DCF. For FY2027-2029, I apply a slight 25-basis points yearly growth deceleration. PLTR&#39;s levered FCF margin is 29.64%. Due to historical solid operating leverage, I expect the metric to improve by 100-basis points every year.</p><p>The constant growth rate is usually a big topic for discussion in comments, and this is the reason why I want to elaborate extensively here. My constant growth rate for PLTR is 7%, which aligns with my previous PLTR DCF. Since I have already mentioned Amazon when discussing the P/E ratio, I want to inform readers that Amazon delivered a staggering 74% revenue CAGR since the late 1990s.</p><p>Aggressive R&amp;D spending and M&amp;A activities helped Amazon to significantly outpace the growth of the U.S. economy. In fundamental analysis, I explained why Palantir is also very well-equipped to drive both organic and inorganic growth.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/02349a0b4370e6fc450a175ae875758f\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"424\"/><span>Data by YCharts</span></p><p>Some readers might say that Amazon is not representative enough because it is an absolutely unique company that was able to maintain dominance across two megatrends of recent decades: e-commerce and cloud. Okay, below are examples of companies that are not as dominant as Amazon. Oracle was able to deliver a 27.5% revenue CAGR since the early 1980s! Cisco is a little bit younger as a public company, and its revenue CAGR is even higher at 40.4%.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/66d619379124130719845e14fcbe9bb3\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"439\"/><span>Data by YCharts</span></p><p>Therefore, I believe that Palantir&#39;s 7% constant growth rate is sound. According to Seeking Alpha, there are 2.28 billion PLTR shares outstanding. Incorporating all assumptions into the DCF model returns the fair share price of $83.53.</p><p>A 4% upside potential does not look very attractive, especially after the aggressive rally of the last few months.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2c334e95df4c2ac976cf0ed54783a7a7\" alt=\"Calculated by the author\" title=\"Calculated by the author\" tg-width=\"640\" tg-height=\"297\"/><span>Calculated by the author</span></p><h3 id=\"id_3797030193\">Mitigating factors</h3><p>When investors witness a bull run like Palantir delivered in 2024, the FOMO effect is inevitably high. Moreover, PLTR is not some meme-stock or a &#39;pump-and-dump&#39; story. The business is fundamentally robust, and the AI momentum remains solid, which makes the FOMO effect even stronger.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/30aeb400f81a08d81dab77981ddfa16b\" alt=\"SA\" title=\"SA\" tg-width=\"352\" tg-height=\"167\"/><span>SA</span></p><p>Therefore, despite my cautious stance and the overall &#39;Hold&#39; rating for PLTR across various sources, the power of momentum might prevail over the short term. If the stock approaches and surpasses the significant $100 psychological level, it could very likely trigger another massive rally — one that might leave me regretting not adding more shares to my position.</p><h2 id=\"id_4284691286\">Conclusion</h2><p>I reiterate a &#39;Hold&#39; rating because the remaining upside does not look worth the risk. At the same time, a wonderful company like Palantir can easily deliver new big positive surprises, and I am unwilling to sell my current notable PLTR holding.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir: Too Good To Sell, Too Pricey To Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir: Too Good To Sell, Too Pricey To Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-24 16:12 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4746013-palantir-too-good-to-sell-too-pricey-to-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryPalantir's aggressive revenue growth, solid operating leverage, and strong AI market tailwinds make it fundamentally robust and promising for long-term investors.However, the stock might face a...</p>\n\n<a href=\"https://seekingalpha.com/article/4746013-palantir-too-good-to-sell-too-pricey-to-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4746013-palantir-too-good-to-sell-too-pricey-to-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1177136433","content_text":"SummaryPalantir's aggressive revenue growth, solid operating leverage, and strong AI market tailwinds make it fundamentally robust and promising for long-term investors.However, the stock might face a bumpy road in early 2025 due to historically weak seasonal patterns in the first few months.I believe a 4% upside potential is not particularly attractive, especially given the recent aggressive insider selling.IntroductionMy August 24 rating downgrade to 'Hold' for Palantir gives me mixed feelings. On the one hand, the stock price spiked from $31 to $80 since my previous call. On the other hand, a 'Hold' is not a 'Sell' and I only regret that I did not buy more back in August. Still, I enjoyed this massive rally of the last four months, and I reiterate my 'Hold' rating.My analysis places significant emphasis on valuation because fundamentally, the company continues moving in line with its aggressive growth strategy. The ability to deliver on business promises makes me extremely bullish about PLTR overall, but valuation matters the most after such an aggressive bull run.Fundamental analysisIt is always the same over the long term - the ability to drive aggressive revenue growth coupled with the operating leverage is a powerful fundamental combination. Palantir is an absolute powerhouse from this perspective.Data by YChartsPalantir's year-over-year revenue growth has been accelerating aggressively over the last several quarters, which reached 30% in Q3 2024. Such an aggressive revenue growth acceleration is accompanied by a rock-solid operating leverage. Palantir's GAAP operating income has almost tripled over the last five quarters, which is a remarkable achievement.PLTRFor how long will such a bullish P&L dynamic last? It is highly likely that Palantir will be able to maintain such a stellar trajectory for a prolonged period. AI tailwinds are strong as governments and business are striving to make their decision-making processes more data-driven.Statista is a reputable source, and it projects the global AI market will see a robust 28.5% CAGR between 2024 and 2030. With that being said, industry tailwinds are highly likely to remain strong for Palantir for at least the next six years.StatistaAs readers can see above, Machine Learning is by far the largest segment of the AI industry, and it will contribute the most to the projected market growth. Therefore, we can expect the company to continue driving aggressive revenue growth, especially thanks to its Artificial Intelligence Platform ('AIP'). Moreover, innovation and improving value for customers remain the core of Palantir's growth strategy as the company has been aggressively ramping up its R&D spending in recent quarters.Data by YChartsThe reason why I am highly convinced in Palantir's ability to demonstrate more operating leverage is the company's proven track record of cross-selling. Palantir's net dollar retention was 118% in Q3 2024, a level suggesting that the company is strong in cross-selling. Moreover, the company is quite strong in driving growth across its large contracts.PLTRPalantir is also very well-prepared to drive inorganic growth. The company currently boasts a $4.6 billion cash position and PLTR is almost free of debt. Such a clean balance sheet positions the company well for potential M&A deals, which might unlock new revenue growth opportunities and synergies. Moreover, the number of shares issued has been quite stable over the last few quarters, which is also beneficial for investors.Yahoo FinanceOn the other hand, there are some temporary setbacks on the horizon as well. Palantir is relatively young as a public company and the stock's seasonal patterns might not be enough representation, but I have to warn readers that success-rates are quite low for January-May for PLTR. The stock usually performs much better in the second half of a year, with January-May success rates not higher than 50%. April even has a very disappointing zero percent success rate.SAFurthermore, PLTR's insiders have been selling the stock quite aggressively in recent months. The number of shares bought was also substantial, but still insiders were selling notably more than buying. Aggressive insider selling is rarely a good catalyst for the share price.NasdaqOverall, there are some temporary setbacks on the horizon for the share price, but they will only matter in the short term. Over the long term, my conviction in Palantir's ability to drive value for shareholders remains extremely high.Valuation analysisPalantir's 2024 estimated P/E ratio of 212 is extremely high, but I always prefer to look at the trajectory. Since PLTR demonstrated strong operating leverage in recent years, and it has bright revenue growth prospects, the P/E ratio is expected to shrink significantly over the next few years.SAOf course, a 111 estimated FY2027 forward P/E ratio might also look very high for conservative investors. But picture this, Amazon's average P/E ratio between 2009 and 2019 was jaw-dropping 325. Nevertheless, due to Amazon's aggressive business expansion, its stock price has multiplied several times over the same period. Palantir is one of the biggest AI winners, so I think such a high forward ratio is well-deserved.Data by YChartsMoreover, PLTR's DCF model looks good as well. The WACC I have used to discount future cash flows is 8%. The large sample of Wall Street analysts covering PLTR's revenue projections for FY2025-2026 makes consensus a reliable source for the first two years of my DCF. For FY2027-2029, I apply a slight 25-basis points yearly growth deceleration. PLTR's levered FCF margin is 29.64%. Due to historical solid operating leverage, I expect the metric to improve by 100-basis points every year.The constant growth rate is usually a big topic for discussion in comments, and this is the reason why I want to elaborate extensively here. My constant growth rate for PLTR is 7%, which aligns with my previous PLTR DCF. Since I have already mentioned Amazon when discussing the P/E ratio, I want to inform readers that Amazon delivered a staggering 74% revenue CAGR since the late 1990s.Aggressive R&D spending and M&A activities helped Amazon to significantly outpace the growth of the U.S. economy. In fundamental analysis, I explained why Palantir is also very well-equipped to drive both organic and inorganic growth.Data by YChartsSome readers might say that Amazon is not representative enough because it is an absolutely unique company that was able to maintain dominance across two megatrends of recent decades: e-commerce and cloud. Okay, below are examples of companies that are not as dominant as Amazon. Oracle was able to deliver a 27.5% revenue CAGR since the early 1980s! Cisco is a little bit younger as a public company, and its revenue CAGR is even higher at 40.4%.Data by YChartsTherefore, I believe that Palantir's 7% constant growth rate is sound. According to Seeking Alpha, there are 2.28 billion PLTR shares outstanding. Incorporating all assumptions into the DCF model returns the fair share price of $83.53.A 4% upside potential does not look very attractive, especially after the aggressive rally of the last few months.Calculated by the authorMitigating factorsWhen investors witness a bull run like Palantir delivered in 2024, the FOMO effect is inevitably high. Moreover, PLTR is not some meme-stock or a 'pump-and-dump' story. The business is fundamentally robust, and the AI momentum remains solid, which makes the FOMO effect even stronger.SATherefore, despite my cautious stance and the overall 'Hold' rating for PLTR across various sources, the power of momentum might prevail over the short term. If the stock approaches and surpasses the significant $100 psychological level, it could very likely trigger another massive rally — one that might leave me regretting not adding more shares to my position.ConclusionI reiterate a 'Hold' rating because the remaining upside does not look worth the risk. At the same time, a wonderful company like Palantir can easily deliver new big positive surprises, and I am unwilling to sell my current notable PLTR holding.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":17,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1177136433"}