Why Palantir Is My Top Holding

Seekingalpha2023-05-10

SummarySome people ask why I've been buying Palantir hand over fist during the recent meltdown.Palantir is a unique, market-leading, highly undervalued company relative to its revenue growth and ...

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Comments

jethro
2023-05-11
jethro
Thanks for sharing
VivianChua
2023-05-10
VivianChua
Great to position 💚 👍 👌
AdelGYS
2023-05-10
AdelGYS
Noted with thanks
daveybaby
2023-05-10
daveybaby
Great review.

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The company's stock accounts for approximately 6% of my All-Weather Portfolio holdings, making it the most significant single asset I now own. Moreover, I'm not selling a single share, especially not after Palantir's stellar earnings. Furthermore, it's not simply about the better-than-anticipated top and bottom line numbers with Palantir. This company is going places with its advanced, market-leading technologies and highly talented workforce. Therefore, while Palantir is around $8-$10 here, it should be a $50 stock in 2-3 years. Palantir should become increasingly profitable as the company's revenues expand, leading to a much higher stock price in the coming years.Technically - Palantir Should Go Much HigherPLTR (stockcharts.com)Quite remarkably, nearly three years after going public, Palantir's stock is still trading around its IPO range. Yes, the stock had a meteoric rise around the height of the tech bubble, becoming irrationally overbought. However, Palantir's stock experienced an epic 87% peak-to-trough drop in the current bear market. The technical image is highly positive, and Palantir's stock should start another long-term uptrend soon. Also, the downside appears limited, and the stock may not drop to the $6-$7 range again. Therefore, any pullbacks from here should be considered buying opportunities, in my view.Say Hello to The Palantir CrewThe \"Palantir Pack\" includes - co-founder Joe Lonsdale, first employee Alex Moore, 10th hire Garry Tan, and others. All three gentlemen mentioned have been founders and are now founders of an alumni network for Palantir.Palantir is an elite workplace and appears similar to young, up-and-coming Tesla (TSLA) or SpaceX. Harvard called Palantir a unicorn in 2015, and the company's been attracting the top talent in Silicon Valley for years. Its alumni network is remarkable for a relatively young company with multi-billion dollar financial institution founders, defense contractor founders, and much more making the list.Palantir - Alumni's Top CompaniesPalantir alumni's top companies (protocol.com)Therefore, while Palantir may appear like a boring defense contractor, it's one of the most influential technology companies globally. Palantir's valuation remains around $16 billion, but could be around $18 billion after the bell. However, provided the company's top talent, global network, market leadership, and other distinct advantages, its valuation should be much higher and could reach $50-$100 billion in the coming years (2-3). Also, Palantir is at the cutting edge of AI, and its revenue growth should remain substantial for several years (5-10), enabling the company to become increasingly profitable in the coming years.Palantir - On the Cutting Edge of AIPalantir is essentially integrating AI into the U.S. military's decision-making process. The company recently launched an AI platform designed to help with drone surveillance, generating attack plans, and jamming enemy communications. Other companies aren't typically involved in such ventures, as Palantir needs more competitors to provide similar comprehensive solutions. Thus, Palantir has immense potential to grow, expanding market share in its government and commercial segments long term.The Recent Earnings - ExcellentWhile many companies seem to be struggling, Palantir is doing well. The company reported Non-GAAP EPS of 5 cents, beating by 1 cent (20%). Not that counting pennies is important here, but the results are excellent. Revenues came in at $525.2 million in Q1, topping estimates by $20 million, showing an 18% YoY gain. Moreover, the U.S. commercial revenue grew by 26% YoY to $107 million. U.S. government revenues expanded nicely by about 22% to $230 million.Furthermore, Palantir's customer count increased by 41% YoY and 7% QoQ. U.S. commercial customer count expanded by about 50% YoY to 155 customers in Q1 2023. For the full-year 2023, the company guided to revenues of $2.185-$2.235 billion vs. $2.2B, the consensus. The company also guided to adjusted income from operations of $506-$556 million and GAAP profitability each quarter in 2023.This dynamic provides a high probability for a full-year beat over the current depressed consensus estimates. Therefore, as we advance, we should see higher revisions concerning Palantir's growth prospects and profitability potential.Income StatementIncome statement (investors.palantir.com)We see an extremely high gross margin of roughly 80% for the last quarter (including SBC). Moreover, we see revenue growth eclipsing the growth of operating expenses, leading to GAAP profitability in the previous quarter. Palantir provided a net income of $17 million compared to a loss of more than $100 million in the same quarter last year. Therefore, we see Palantir growing more profitable as its revenues increase, and this dynamic should continue, leading to higher-than-anticipated profitability and EPS in the coming years.Palantir's Earnings Estimates to RiseRevenue Projections - Too Low NowPLTR (seekingalpha.com)Palantir's 2023 consensus revenue estimate is $2.2B, with a high-end target of $2.24B. Palantir just announced it should see between $2.185-$2.235B. The company's target could raise the average estimate to about $2.21 billion, and higher-end estimates could now expand to $2.3B. Furthermore, Palantir has surpassed estimates providing its second consecutive GAAP positive quarter, and promises more profits ahead. Therefore, we should see Palantir's profitability metrics also rise soon.EPS Projections - Likely to IncreaseEPS (seekingalpha.com)Consensus EPS estimates are 20 cents this year and about 25 cents for 2024. However, provided that Palantir surpassed consensus EPS figures in the past two quarters, we should see outperformance as Palantir advances. Palantir is a high-margin/high-profitability company, and it should get increasingly profitable as its revenues increase in the coming years.Here's where Palantir's stock could be in the future:Year2023202420252026202720282029Revenue Bs$2.3$3$3.6$4.64$5.95$7.55$9.5Revenue growth23%28%20%29%28%27%25%EPS$.20$.30$.45$.65$.94$1.311.77EPS growthN/A50%50%47%45%40%35%Forward P/E27303335343330Stock price$8$14$21$33$52$59$70Source: The Financial ProphetWhile my estimates seem bullish, they could be modest as Palantir could become profitable quicker than anticipated. Furthermore, the company could experience more demand and provide higher revenue growth in future years. Also, Palantir's multiple can expand more than expected, and the company's share price may appreciate more rapidly than my projections suggest.Nevertheless - There are Risks to ConsiderDespite my bullish outlook for Palantir, market participants should consider several potential risks associated with this investment. The company's earnings are minimal and may not increase as much as I envision. Moreover, if the company's growth picture were to turn less bullish, the stock could head lower. Also, if Palantir lost favor with the government or had a data breach, the stock could experience a notable decline. So, please carefully consider these and other risks before you invest in Palantir.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9970071707,"gmtCreate":1683766428609,"gmtModify":1683766433105,"author":{"id":"4103089604754610","authorId":"4103089604754610","name":"jethro","avatar":"https://static.tigerbbs.com/445b4765728802a2e3b3795587bae0a3","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":6,"crmLevelSwitch":1,"idStr":"4103089604754610","authorIdStr":"4103089604754610"},"htmlText":"Thanks for sharing&nbsp;","listText":"Thanks for sharing&nbsp;","text":"Thanks for sharing","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9970071707","repostId":2334224872,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9970097879,"gmtCreate":1683697960291,"gmtModify":1683697964962,"author":{"id":"3580011914778910","authorId":"3580011914778910","name":"VivianChua","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"3580011914778910","authorIdStr":"3580011914778910"},"htmlText":"Great to position&nbsp;💚 👍 👌&nbsp;","listText":"Great to position&nbsp;💚 👍 👌&nbsp;","text":"Great to position 💚 👍 👌","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9970097879","repostId":2334224872,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9970092030,"gmtCreate":1683694556320,"gmtModify":1683694560600,"author":{"id":"3581174525648411","authorId":"3581174525648411","name":"AdelGYS","avatar":"https://static.tigerbbs.com/6147c611984619a69630f877f8238a7a","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3581174525648411","authorIdStr":"3581174525648411"},"htmlText":"Noted with thanks","listText":"Noted with thanks","text":"Noted with thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9970092030","repostId":2334224872,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9970091558,"gmtCreate":1683690479874,"gmtModify":1683690500486,"author":{"id":"4139474158792692","authorId":"4139474158792692","name":"daveybaby","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4139474158792692","authorIdStr":"4139474158792692"},"htmlText":"Great review.&nbsp;","listText":"Great review.&nbsp;","text":"Great review.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9970091558","repostId":2334224872,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":46,"commentSize":4,"repostSize":1,"favoriteSize":1,"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":"4.29.2","shortVersion":"4.29.2","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/2334224872"}