Thinking of Buying Palantir Stock? You Need To See These 4 Charts First

Motley Fool12-23 16:40

Palantir is up more than 300% this year. Its valuation has reached unsustainable levels. It's now one of the most valuable SaaS stocks. Palantir Technologies (PLTR 8.54%) has taken the...

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You Need To See These 4 Charts First","media":"Motley Fool","content":"<div>\n<p>Palantir is up more than 300% this year.\n\n\n\n\n\n\n\nIts valuation has reached unsustainable levels.\n\n\n\n\n\n\n\nIt's now one of the most valuable SaaS stocks. \n\nPalantir Technologies (PLTR 8.54%) has taken the...</p>\n\n<a href=\"https://www.fool.com/investing/2024/12/23/thinking-buy-palantir-stock-need-see-4-charts/\">Source Link</a>\n\n</div>\n","source":"fool_stock","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>Thinking of Buying Palantir Stock? You Need To See These 4 Charts First</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\">\nThinking of Buying Palantir Stock? You Need To See These 4 Charts First\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-23 16:40 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/12/23/thinking-buy-palantir-stock-need-see-4-charts/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Palantir is up more than 300% this year.\n\n\n\n\n\n\n\nIts valuation has reached unsustainable levels.\n\n\n\n\n\n\n\nIt's now one of the most valuable SaaS stocks. \n\nPalantir Technologies (PLTR 8.54%) has taken the...</p>\n\n<a href=\"https://www.fool.com/investing/2024/12/23/thinking-buy-palantir-stock-need-see-4-charts/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4543","symbol_name":"AI","start_time":0,"source_url":"https://www.fool.com/investing/2024/12/23/thinking-buy-palantir-stock-need-see-4-charts/","article_id":"2493731438","we_media_id":null,"thumbnails":["https://g.foolcdn.com/misc-assets/aggregator_fallback.png"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493731438","pubTimestamp":1734943200,"columns":[],"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Palantir is up more than 300% this year.It's now one of the most valuable SaaS stocks.Finance as of Dec. 19As you can see, Palantir wouldn't have to grow much more to become the No. 3 or even No. 2 biggest SaaS stock. Salesforce's market cap isn't necessarily a ceiling on the size of any SaaS stock, but it does offer an indication of the limitations of a cloud software company. Based on the sector leaders, it would seem unreasonable for Palantir's market cap to triple from here, at least without significant growth among its peers.The chart below also shows why Palantir's valuation looks especially frothy.PLTR Revenue  data by","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4543":"AI","BK4547":"WSB热门概念","BK4585":"ETF&股票定投概念","BK4523":"印度概念","TTM":"塔塔汽车","LU1861558580.USD":"日兴方舟颠覆性创新基金B","BK4588":"碎股","BK4023":"应用软件","BK4099":"汽车制造商","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","PLTR":"Palantir Technologies Inc."},"translate_title":"考虑购买Palantir股票？你需要先看这4张图表","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PLTR":1,"TTM":1},"content_text":"Palantir is up more than 300% this year.\n\n\n\n\n\n\n\nIts valuation has reached unsustainable levels.\n\n\n\n\n\n\n\nIt's now one of the most valuable SaaS stocks. \n\nPalantir Technologies (PLTR 8.54%) has taken the market by storm in 2024.Share prices of the artificial intelligence (AI)-focused data fusion specialist are up 332% year-to-date through Dec. 19. The stock soared as its revenue growth accelerated over the last five quarters and its profit margins expanded significantly.In the last year or two, Palantir went from a speculative cloud stock to a viable and growing business. It also benefited from gaining entry to the S&P 500 and soared since the November presidential election as investors seem to think it will benefit from increased spending by the Trump administration on areas like national security and immigration enforcement.  The federal government is Palantir's biggest customer, and the company got its start serving counterterrorist agencies and helping them connect the dots in disparate pieces of data.While Palantir's surge this year is certainly impressive, the stock's valuation seems to have become detached from the underlying business.The chart below shows the company's price-to-sales ratio, which has soared to an astronomical 67.5.PLTR PS Ratio data by YCharts.As you can see, the company's price-to-sales ratio has nearly quadrupled over the last year. The P/S ratio isn't a perfect measure of valuation, but 67.5 is off-the-charts high. A P/S of 20 is typically considered expensive, even in an industry like software where stocks tend to earn high valuations.If Palantir had huge profit margins like Nvidia, the P/S valuation wouldn't be as alarming as it is. Currently, its P/E ratio is close to 400, so high to be nearly meaningless. Palantir would have to grow its profits by 10x without a change in the stock price to have a P/E valuation in line with big tech stocks like the \"Magnificent Seven.\"A look at Palantir's peer groupPalantir got attention from investors for its AI platform and its broader potential in AI, but the company's business model is software-as-a-service, and it's already one of the most valuable in that sector.The table below shows the top five SaaS companies by market cap.CompanyMarket Cap1. Salesforce (CRM 2.21%)$321.7 billion2. ServiceNow (NOW 1.52%)$221.8 billion3. Adobe (ADBE 2.24%)$192.5 billion4. Intuit (INTU 1.01%)$178.3 billion5. Palantir Technologies$169 billionSource: Yahoo! Finance as of Dec. 19As you can see, Palantir wouldn't have to grow much more to become the No. 3 or even No. 2 biggest SaaS stock. Salesforce's market cap isn't necessarily a ceiling on the size of any SaaS stock, but it does offer an indication of the limitations of a cloud software company. Based on the sector leaders, it would seem unreasonable for Palantir's market cap to triple from here, at least without significant growth among its peers.The chart below also shows why Palantir's valuation looks especially frothy.PLTR Revenue (TTM) data by YChartsAs you can see Palantir is still much smaller than its peers by revenue, showing it has a lot of catching up to do to justify its market cap and to move up in the market cap rankings above.A comparison of operating income shows a similar gap between Palantir and its SaaS peers.PLTR Operating Income (TTM) data by YChartsWhat it means for PalantirValuation eventually matters, and sometimes it takes a disappointing piece of news like a bad earnings report for investors to be reminded of that.It's possible that Palantir stock can continue to gain from here, but the stock is clearly priced for perfection at this point, especially with the surge following President-elect Donald Trump's victory. No one knows how Palantir will perform in 2025, but the stock seems likely to experience a significant pullback as its current valuation doesn't seem sustainable.Long-term investors may prefer to hold the stock through the volatility, but buying the stock at the current valuation looks like a mistake.","kind":"highlight","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":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"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":"4.29.3","shortVersion":"4.29.3","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/2493731438"}