Why Palantir Remains My Top Holding

seekingalpha2023-06-06

SummaryPalantir is a high-quality monopolistic-style tech company with remarkable long-term revenue growth and profitability potential.The "secretive unicorn" (as described at Harvard) may be the most...

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Comments

QArmieeQ
2023-06-06
QArmieeQ
Still keep at 20
MyBaobao
2023-06-06
MyBaobao
Good sound advice and worth to do more homework before entering
Tootsieroll
2023-06-06
Tootsieroll
Lol
Longs
2023-06-06
Longs
👌🏼🙏🏼
Naimish Bhagat
2023-06-06
Naimish Bhagat
Great information

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Fast forward eight years and Palantir's market cap has only appreciated to roughly $30 billion despite being public with enormous future potential. Palantir remains like a black box for many investors. Due to its secretive nature, it is not always clear what some of the company's operations consist of and what kind of profitability they may bring.Despite this dynamic, Palantir should continue delivering solid revenue growth, leading to increased profitability in the coming years. Additionally, depressed consensus analysts' estimates are likely far below reasonable assumptions due to Palantir's leading market position, advancements in AI, and other elements. Therefore, Palantir is one of the most misunderstood and underappreciated companies, suggesting its stock has tremendous intermediate and long-term upside potential. Palantir now accounts for about 10% of my All-Weather portfolio holdings (largest holding).The Technical Image - Much More Upside AheadPLTR (StockCharts.com)We saw wild price action as the IPO debuted around the tech top. The stock got bid up to obscene levels, and the infamous crash occurred. After peaking at about $44, the stock bottomed at around $6, an approximate 85% peak-to-trough decline. While Palantir's stock drop was beyond epic, it has little to do with the company's fundamentals or long-term profitability prospects. Therefore, despite the post-IPO volatility, Palantir's stock price is likely to move much higher in the intermediate and long term.Palantir traded in a relatively tight range ($6-12) for over a year. This phase was a long-term bottoming phase. The stock recently broke out above the $10-12 resistance level and should continue moving higher in the intermediate and long term. We also saw the 50-day MA move above the 200-day recently, illustrating a shift toward more bullish momentum. Nevertheless, the RSI is above 80, and Palantir's stock is overbought in the near term. Thus, there could be a possibility to purchase shares in the $12.50-10 range if the stock goes through a correction soon.Is Palantir, A Monopoly?Peter Thiel (co-founder) built Palantir based on the idea that a winning company must be monopolistic and that competition is \"for losers.\" While this business philosophy may sound harsh, I agree with it. That's why I am continuously drawn to monopolistic-style companies in blue ocean environments. In this atmosphere, the company can achieve an extensive growth runway coupled with remarkable intermediate and long-term profitability.Palantir is an excellent example of a monopolistic style company operating in a high-growth segment, capable of expanding market share and profitability considerably in the long term. Palantir has the potential to become a $30-50 stock in the next several years (3-5).Here's Why:Palantir offers a complete suite of software tools for analyzing advanced data. While other companies offer partial solutions, Palantir provides the \"whole package.\" Additionally, Palantir's support and services are highly sticky, and once a customer is on a Palantir platform, it will likely be for the long haul.Palantir has one of the most talented workforces in Silicon Valley, making it one of the most influential and innovative companies in the technology industry. Palantir has close ties to numerous multi-billion companies through its alum program and other partnerships. Also, Palantir remains one of the government's top and most trusted contractors, working with multiple defense, intelligence, and other critical agencies.Moreover, Palantir has a dedicated team of engineers that help customize its unique solutions to cater to the needs of each customer. Some of Palantir's private sector clients include JPMorgan (JPM), Airbus, Kinder Morgan (KMI), and many others. In 2023, over 1179 companies have started using Palantir as a Big Data Analytics tool.Despite having around 1,300 customers (government agencies included), Palantir's market share of the massive big-data analytics market is only 2%. Moreover, Palantir is at the cutting edge of AI and machine learning. Palantir's leading position should accelerate due to its advancements in AI and machine learning, improving its software solutions and leading to more significant growth and substantial profitability potential in the coming years.Palantir's Enormous Earnings PotentialBefore discussing Palantir's earning ability, we should consider that Palantir is a high-growth company, focusing much more on growing operations and expanding market share rather than maximizing earnings. Nevertheless, Palantir just recorded its second straight GAAP positive quarter. This dynamic illustrates that despite some SBC and other transitory concerns, Palantir can and should become increasingly profitable. Also, let's consider that while many companies are experiencing EPS declines, Palantir is putting up record earnings despite the economic slowdown.EPS Estimates - Still Too DepressedEPS estimates (SeekingAlpha.com)Another factor worth noting is that Palantir's revenues and earnings projections got revised lower due to the sudden crash in most tech stocks. However, the lowered estimates likely became too depressed. They should get revised upward as the company advances, illustrating higher-than-expected revenue growth and more than-anticipated profitability in future years.Consensus analysts expect a non-GAAP income of 21 cents this year and only 26 cents in EPS in 2024. Therefore, if we consider Palantir's price at around $14, the stock trades at approximately 50 times forward EPS estimates. However, provided Palantir can surpass estimates, it should continue beating lowballed analysts' figures as the company advances.Revenue Projections - Should Move HigherRevenue estimates (SeekingAlpha.com)Palantir provided favorable results and strong guidance during its latest earnings announcement. It beat on the top and bottom line and gave better than anticipated forward guidance. However, Palantir's projections may be modest, given the hype surrounding AI and other lucrative innovative solutions Palantir offers.Therefore, we should see future revenues coming toward the higher end of analysts' estimates, and we may see a rebound back to a 30% YoY revenue growth rate as the company advances. I'm not saying that Palantir will deliver a 50%+ revenue guidance beat like Nvidia (NVDA) next quarter. Still, we could see better-than-expected results from Palantir and other companies advancing in AI.Where Palantir's stock price could be in future years:Year2023202420252026202720282029Revenue Bs$2.28$2.85$3.7$4.75$6$7.6$9.5Revenue growth20%25%30%28%27%26%25%EPS$0.25$0.33$0.46$0.64$0.86$1.18$1.59EPS growth317%32%40%38%36%35%34%Forward P/E42444547464342Stock price$14$20$29$40$55$68$87Source: The Financial ProphetI'm using relatively modest revenue growth, and EPS growth projections, provided Palantir's advantageous market-leading position and high level of profitability. Also, while the forward P/E ratio may appear elevated, Palantir is a high-growth company with a remarkably long growth runway, capable of delivering double-digit revenue growth through 2030. Furthermore, Palantir's business operations (especially on the commercial side) could expand faster than anticipated, leading to higher-than-anticipated revenue growth and profitability potential. Therefore, despite the possibility of a near-term pullback, Palantir's stock has a high probability of moving significantly higher in the coming years, making it one of my top holdings for the next decade.Risks to PalantirDespite 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":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":184391784898736,"gmtCreate":1686041914121,"gmtModify":1686041918913,"author":{"id":"3572474257232421","authorId":"3572474257232421","name":"QArmieeQ","avatar":"https://static.tigerbbs.com/4880f6ec2e047cce565a00b5fd10d91f","vip":1,"crmLevel":3,"crmLevelSwitch":1},"htmlText":"Still keep at 20","listText":"Still keep at 20","text":"Still keep at 20","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/184391784898736","repostId":2341074112,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":184403100508280,"gmtCreate":1686028975099,"gmtModify":1686028979230,"author":{"id":"4095124968395710","authorId":"4095124968395710","name":"MyBaobao","avatar":"https://community-static.tradeup.com/news/5777ad6d0b01bc8d1b8d2d58c571abe5","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Good sound advice and worth to do more&nbsp; homework before entering&nbsp;","listText":"Good sound advice and worth to do more&nbsp; homework before entering&nbsp;","text":"Good sound advice and worth to do more homework before entering","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/184403100508280","repostId":2341074112,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":184390627528808,"gmtCreate":1686025927492,"gmtModify":1686025930595,"author":{"id":"3575535431943242","authorId":"3575535431943242","name":"Tootsieroll","avatar":"https://static.tigerbbs.com/e1ec6090a100f45863daf6da5efcf9ad","vip":1,"crmLevel":8,"crmLevelSwitch":0},"htmlText":"Lol","listText":"Lol","text":"Lol","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/184390627528808","repostId":2341074112,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":184383121498152,"gmtCreate":1686024413811,"gmtModify":1686024418621,"author":{"id":"4115290449563752","authorId":"4115290449563752","name":"Longs","avatar":"https://community-static.tradeup.com/news/824b5073731ab909a8d4e129caa8d995","vip":1,"crmLevel":6,"crmLevelSwitch":0},"htmlText":"👌🏼🙏🏼","listText":"👌🏼🙏🏼","text":"👌🏼🙏🏼","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/184383121498152","repostId":2341074112,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":184281514692704,"gmtCreate":1686014446588,"gmtModify":1686015254471,"author":{"id":"4145942173192222","authorId":"4145942173192222","name":"Naimish Bhagat","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"Great information&nbsp;","listText":"Great information&nbsp;","text":"Great information","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":9,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/184281514692704","repostId":2341074112,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":60,"commentSize":5,"repostSize":4,"favoriteSize":7,"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":"4.24.2","shortVersion":"4.24.2","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/2341074112"}