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Tulip_Tokki
2021-08-26
Who’s adding more stocks to Palantir?
Palantir: Explaining The Unexplainable
Tulip_Tokki
2021-08-19
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(PLTR) reported its Q2 results on August 12 and investors must have been pleased since the stock jumped over 10% that day. However, I find myself disagreeing with this assessment of Palantir's results. While there were some positive trends year-on-year, profitability and some measures of growth are slowing down quarter-on-quarter. Furthermore, the company keeps losing money due to stock-based compensation. Palantir's saving grace is its fast-growing revenues, but even these will have to slow down eventually. While I like the business, I am still not completely sold on Palantir as an investment.</p>\n<p><b>Recent Results</b></p>\n<p>Palantir moderately beat estimates in Q2. Revenue was 4% higher than expected, and earnings were 16% above estimates. Overall, Palantir grew revenues 49.1% YoY, which is still impressive. Let's give credit where credit is due. Palantir has done well to deliver consistent results that are in line with expectations and show glimpses of a better future.</p>\n<p>I'd say the most impressive metric from Q2 was the growth in Foundry in the US, the company's commercial platform. Year on year, this segment grew a whopping 90%. This also represents an acceleration when compared to Q1, which saw Foundry revenues grow 72% compared to the first quarter of last year.</p>\n<p>On the profitability side, Palantir also posted some \"encouraging\" metrics.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/23f8a97a768d29e382d32b6790d60656\" tg-width=\"1280\" tg-height=\"715\" width=\"100%\" height=\"auto\"><span>Source:Investor Presentation</span></p>\n<p>On the surface, Palantir did quite well this quarter, compared to last year. The company is actually cash flow positive, bringing in over $200 million this quarter. Furthermore, the company has increased their full-year guidance to over $300 million in FCF. Operating margins, on the other hand, remain stable at 31%.</p>\n<p>The bottom line is that Palantir is, at least, delivering on what it has promised. But for a company that is so well regarded by investors, perhaps a little more should be expected.</p>\n<p><b>All that glitters ain't gold</b></p>\n<p>While Palantir's earnings were not bad, I was surprised to see the stock take such a big jump on earnings day. If we look deeper into the numbers, a few concerning trends don't bode well for Palantir's long-term prospects.</p>\n<p>Most notably, I have to point out that Palantir's profitability was down by most metrics if we compare it to Q1. Free cash flow margin, for example, which came in at 13%, was noticeably worse than in Q1, when the company achieved a 44% margin. The same is true of operating margin. Slides show impressive YoY growth, but the operating margin has decreased 300 basis points quarter on quarter. Contribution and gross margins were also down slightly quarter-on-quarter.</p>\n<p>Even the growth story has its flaws. While the company is doing incredibly well domestically, Palantir's Foundry revenues only increased 28% internationally. The company is struggling to make an impact abroad.</p>\n<p>But what continues to be the biggest concern is stock-based compensation, and the latest quarterly results have done nothing to dissipate the fears that SBC is eroding shareholder value. Rather, it has reaffirmed them.</p>\n<p>In Q2, stock-based compensation increased by $32 million. Meanwhile, the actual operating income was flat, which means that the company's real losses increased roughly by$32 million. Not only is Palantir losing money because of SBC, but it is also losing proportionally more money than before. Can Palantir turn this around? That depends on how we define Palantir.</p>\n<p><b>What is Palantir?</b></p>\n<p>That's what we don't know. Palantir has been around for over a decade, but it has only been under the scrutiny of the public eye for about a year. It still doesn't seem to be clear to anyone, and perhaps even Palantir's management, what the company is.</p>\n<p>Palantir's stock trades at a very high valuation as if Palantir is going to be a hyper-growth company for years to come. But there are problems with this theory. Palantir isn't your classic SaaS company. They can't just sell their products and enjoy a steady stream of revenues without putting in much work. As I have talked about before, Palantir relies on having a team of experts that can help its customers with each specific project. In many ways, Palantir is like a consulting firm.</p>\n<p>If that's the case though, one must wonder just how fast Palantir can grow, and also just how much the company can reduce its stock-based compensation. Palantir's growth, for now, is severely limited in terms of demand and supply. Palantir's services can only realistically be used by government agencies and large corporations. I am aware that the company is making moves to push Foundry on smaller businesses, but this won't pay off any time soon. On the other hand, there's a limit to how much Palantir can grow due to its workforce. Essentially, for each new dollar of revenue, they need to add more salespeople/consultants. And from what we've seen, this also severely limits profitability, since Palantir employees receive such high stock-based compensation. This may indeed be necessary for the company to retain the best talent, but it doesn't mean it's good for investors, especially if the current trend continues.</p>\n<p>If Palantir isn't a high-growth tech company though, what is it? As has been pointed out already, Palantir is on route to becoming a major government contractor. These companies often have low margins with stable and predictable revenues and limited growth potential. In many ways, Palantir could be seen as a utility, since it provides the very necessary infrastructure to the government.</p>\n<p>I know this assessment will displease many, so let me split the difference. Palantir is an interesting company with a lot more potential than a utility. However, it is quite clear that Palantir can't become, at this moment, a mega-cap tech stock. Its business model and target customer are just too limited.</p>\n<p><b>Takeaway</b></p>\n<p>In conclusion, defining Palantir is a difficult task, which is why interpreting its results is also hard. I find these results unencouraging, given the slowdown in profitability and growth in line with estimates. While Palantir is a great business, it's not going to meet investors' expectations of becoming a trillion-dollar company in the next decade. Palantir is not AlphabetInc.(NASDAQ:GOOGL)or Facebook,Inc. (FB). Its business model, for now at least, is limited, and the latest results don't show a move in the right direction. I'd consider investing in Palantir if the valuation reflected this fact, but it doesn't. There is a lot of speculation going on with Palantir, and though I concede that there is a possibility that Foundry/Gotham becomes the tool of the future for most businesses around the world, it is simply too much of a gamble at this point.</p>","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: Explaining The Unexplainable</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: Explaining The Unexplainable\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-26 22:21 GMT+8 <a href=https://seekingalpha.com/article/4451743-palantir-explaining-the-unexplainable><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nPalantir reported solid YoY improvements, but its QoQ trajectory was disappointing.\nProfitability decreased compared to last quarter, and stock-based compensation generated losses for the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4451743-palantir-explaining-the-unexplainable\">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/4451743-palantir-explaining-the-unexplainable","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1100506517","content_text":"Summary\n\nPalantir reported solid YoY improvements, but its QoQ trajectory was disappointing.\nProfitability decreased compared to last quarter, and stock-based compensation generated losses for the company.\nThe current valuation suggests Palantir will be a high-growth mega-cap in a few years, but the company is limited by its business model and target clients.\n\najr_images/iStock via Getty Images\nThesis Summary\nPalantir TechnologiesInc. (PLTR) reported its Q2 results on August 12 and investors must have been pleased since the stock jumped over 10% that day. However, I find myself disagreeing with this assessment of Palantir's results. While there were some positive trends year-on-year, profitability and some measures of growth are slowing down quarter-on-quarter. Furthermore, the company keeps losing money due to stock-based compensation. Palantir's saving grace is its fast-growing revenues, but even these will have to slow down eventually. While I like the business, I am still not completely sold on Palantir as an investment.\nRecent Results\nPalantir moderately beat estimates in Q2. Revenue was 4% higher than expected, and earnings were 16% above estimates. Overall, Palantir grew revenues 49.1% YoY, which is still impressive. Let's give credit where credit is due. Palantir has done well to deliver consistent results that are in line with expectations and show glimpses of a better future.\nI'd say the most impressive metric from Q2 was the growth in Foundry in the US, the company's commercial platform. Year on year, this segment grew a whopping 90%. This also represents an acceleration when compared to Q1, which saw Foundry revenues grow 72% compared to the first quarter of last year.\nOn the profitability side, Palantir also posted some \"encouraging\" metrics.\nSource:Investor Presentation\nOn the surface, Palantir did quite well this quarter, compared to last year. The company is actually cash flow positive, bringing in over $200 million this quarter. Furthermore, the company has increased their full-year guidance to over $300 million in FCF. Operating margins, on the other hand, remain stable at 31%.\nThe bottom line is that Palantir is, at least, delivering on what it has promised. But for a company that is so well regarded by investors, perhaps a little more should be expected.\nAll that glitters ain't gold\nWhile Palantir's earnings were not bad, I was surprised to see the stock take such a big jump on earnings day. If we look deeper into the numbers, a few concerning trends don't bode well for Palantir's long-term prospects.\nMost notably, I have to point out that Palantir's profitability was down by most metrics if we compare it to Q1. Free cash flow margin, for example, which came in at 13%, was noticeably worse than in Q1, when the company achieved a 44% margin. The same is true of operating margin. Slides show impressive YoY growth, but the operating margin has decreased 300 basis points quarter on quarter. Contribution and gross margins were also down slightly quarter-on-quarter.\nEven the growth story has its flaws. While the company is doing incredibly well domestically, Palantir's Foundry revenues only increased 28% internationally. The company is struggling to make an impact abroad.\nBut what continues to be the biggest concern is stock-based compensation, and the latest quarterly results have done nothing to dissipate the fears that SBC is eroding shareholder value. Rather, it has reaffirmed them.\nIn Q2, stock-based compensation increased by $32 million. Meanwhile, the actual operating income was flat, which means that the company's real losses increased roughly by$32 million. Not only is Palantir losing money because of SBC, but it is also losing proportionally more money than before. Can Palantir turn this around? That depends on how we define Palantir.\nWhat is Palantir?\nThat's what we don't know. Palantir has been around for over a decade, but it has only been under the scrutiny of the public eye for about a year. It still doesn't seem to be clear to anyone, and perhaps even Palantir's management, what the company is.\nPalantir's stock trades at a very high valuation as if Palantir is going to be a hyper-growth company for years to come. But there are problems with this theory. Palantir isn't your classic SaaS company. They can't just sell their products and enjoy a steady stream of revenues without putting in much work. As I have talked about before, Palantir relies on having a team of experts that can help its customers with each specific project. In many ways, Palantir is like a consulting firm.\nIf that's the case though, one must wonder just how fast Palantir can grow, and also just how much the company can reduce its stock-based compensation. Palantir's growth, for now, is severely limited in terms of demand and supply. Palantir's services can only realistically be used by government agencies and large corporations. I am aware that the company is making moves to push Foundry on smaller businesses, but this won't pay off any time soon. On the other hand, there's a limit to how much Palantir can grow due to its workforce. Essentially, for each new dollar of revenue, they need to add more salespeople/consultants. And from what we've seen, this also severely limits profitability, since Palantir employees receive such high stock-based compensation. This may indeed be necessary for the company to retain the best talent, but it doesn't mean it's good for investors, especially if the current trend continues.\nIf Palantir isn't a high-growth tech company though, what is it? As has been pointed out already, Palantir is on route to becoming a major government contractor. These companies often have low margins with stable and predictable revenues and limited growth potential. In many ways, Palantir could be seen as a utility, since it provides the very necessary infrastructure to the government.\nI know this assessment will displease many, so let me split the difference. Palantir is an interesting company with a lot more potential than a utility. However, it is quite clear that Palantir can't become, at this moment, a mega-cap tech stock. Its business model and target customer are just too limited.\nTakeaway\nIn conclusion, defining Palantir is a difficult task, which is why interpreting its results is also hard. I find these results unencouraging, given the slowdown in profitability and growth in line with estimates. While Palantir is a great business, it's not going to meet investors' expectations of becoming a trillion-dollar company in the next decade. Palantir is not AlphabetInc.(NASDAQ:GOOGL)or Facebook,Inc. (FB). Its business model, for now at least, is limited, and the latest results don't show a move in the right direction. I'd consider investing in Palantir if the valuation reflected this fact, but it doesn't. There is a lot of speculation going on with Palantir, and though I concede that there is a possibility that Foundry/Gotham becomes the tool of the future for most businesses around the world, it is simply too much of a gamble at this point.","news_type":1},"isVote":1,"tweetType":1,"viewCount":69,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":838811240,"gmtCreate":1629384794380,"gmtModify":1676530024783,"author":{"id":"3574988193271140","authorId":"3574988193271140","name":"Tulip_Tokki","avatar":"https://static.tigerbbs.com/37d27f6f7b065f1075567d6ef93dd545","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574988193271140","authorIdStr":"3574988193271140"},"themes":[],"htmlText":"Great to know!","listText":"Great to know!","text":"Great to know!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/838811240","repostId":"2160573149","repostType":2,"isVote":1,"tweetType":1,"viewCount":129,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":810412682,"gmtCreate":1629991698346,"gmtModify":1676530195878,"author":{"id":"3574988193271140","authorId":"3574988193271140","name":"Tulip_Tokki","avatar":"https://static.tigerbbs.com/37d27f6f7b065f1075567d6ef93dd545","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574988193271140","authorIdStr":"3574988193271140"},"themes":[],"htmlText":"Who’s adding more stocks to Palantir?","listText":"Who’s adding more stocks to Palantir?","text":"Who’s adding more stocks to Palantir?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/810412682","repostId":"1100506517","repostType":4,"isVote":1,"tweetType":1,"viewCount":69,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":838811240,"gmtCreate":1629384794380,"gmtModify":1676530024783,"author":{"id":"3574988193271140","authorId":"3574988193271140","name":"Tulip_Tokki","avatar":"https://static.tigerbbs.com/37d27f6f7b065f1075567d6ef93dd545","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574988193271140","authorIdStr":"3574988193271140"},"themes":[],"htmlText":"Great to know!","listText":"Great to know!","text":"Great to know!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/838811240","repostId":"2160573149","repostType":2,"repost":{"id":"2160573149","kind":"highlight","pubTimestamp":1629350340,"share":"https://ttm.financial/m/news/2160573149?lang=&edition=fundamental","pubTime":"2021-08-19 13:19","market":"us","language":"en","title":"Where Will Palantir Be in 5 Years?","url":"https://stock-news.laohu8.com/highlight/detail?id=2160573149","media":"Motley Fool","summary":"The data mining firm is just getting started.","content":"<p><b>Palantir</b> (NYSE:PLTR) is a divisive stock. The bulls believe the data mining firm will continue to expand across the government and commercial sectors, while the bears believe it's too dependent on government contracts, its commercial business faces too many competitors, and its stock is too expensive. Palantir's volatility reflects that battle. It went public via a direct listing last September, started trading at $10 per share, surged to an all-time high of $45 in late January, and now trades in the mid $20s.</p>\n<p>However, Palantir recently posted a strong second-quarter report and reiterated its guidance for annual revenue growth of more than 30% from 2021 to 2025. That rosy forecast suggests Palantir's revenue could rise from $1.1 billion in fiscal 2020 to over $4 billion in fiscal 2025. Let's see how Palantir intends to maintain that robust growth rate, and where its stock might be headed over the next five years.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cd57cf04b83c8bf46288ca143a922a5f\" tg-width=\"700\" tg-height=\"393\" width=\"100%\" height=\"auto\"><span>Image source: Getty Images.</span></p>\n<h2>The secular growth of its core markets</h2>\n<p>Palantir's Gotham platform serves government clients, while its Foundry platform mainly serves commercial clients. Its cloud service Apollo provides constant software updates for both platforms.</p>\n<p>Gotham and Foundry both gather large amounts of data from disparate sources, analyze those findings with artificial intelligence (AI) algorithms, then use the results to help organizations make data-driven decisions. They also secure organizations' data with cybersecurity services.</p>\n<p>For example, Gotham helps the U.S. military gather intel to plan missions, while Foundry helps large companies like <b>Airbus</b> optimize their operations, cut costs, and develop new strategies. Therefore, Palantir should benefit from the secular expansion of the data analytics, AI, and cybersecurity markets.</p>\n<p>The big data and business analytics market could grow at a CAGR of 10.9% between 2020 and 2027, according to Allied Market Research, while Facts & Factors expects the AI market to expand at a CAGR of 35.6% between 2021 and 2026. The cybersecurity market could also grow at a CAGR of 9.7% from 2021 to 2026, according to Markets and Markets.</p>\n<p>Palantir's platforms bundle together services from all three expanding markets. It could also grow much faster than its industry peers in all three markets as it leverages its hardened reputation for managing military divisions and government agencies to secure more commercial clients.</p>\n<h2>More commercial spending, more government spending</h2>\n<p>Palantir served eight Fortune 100 companies, 12 Global 100 companies, and 24 Global 300 companies at the end of fiscal 2020. During the fourth-quarter conference call in February, COO Shyam Sankar said those low penetration rates represented an \"immense and growing\" opportunity for Palantir's commercial business. During the first-quarter conference call in May, Sankar said Palantir still only had a \"handful of Fortune 500 customers\" and accounted for \"less than <a href=\"https://laohu8.com/S/AONE.U\">one</a>-tenth of a percent of annual defense spending.\"</p>\n<p>If we look back at Palantir's growth rates, we can see why the bulls are so excited. If Palantir can generate these kinds of growth rates while reaching only a fraction of its total addressable markets, it could grow significantly larger as those penetration rates rise.</p>\n<table border=\"1\" width=\"607\">\n <colgroup></colgroup>\n <tbody>\n <tr valign=\"TOP\">\n <th width=\"206\"><p>Revenue Growth (YOY)</p></th>\n <th width=\"86\"><p>FY 2019</p></th>\n <th width=\"72\"><p>FY 2020</p></th>\n <th width=\"88\"><p>Q1 2021</p></th>\n <th width=\"83\"><p>Q2 2021</p></th>\n </tr>\n <tr valign=\"TOP\">\n <td width=\"206\"><p><b>Government</b></p></td>\n <td width=\"86\"><p>35%</p></td>\n <td width=\"72\"><p>77%</p></td>\n <td width=\"88\"><p>76%</p></td>\n <td width=\"83\"><p>66%</p></td>\n </tr>\n <tr valign=\"TOP\">\n <td width=\"206\"><p><b>Commercial</b></p></td>\n <td width=\"86\"><p>17%</p></td>\n <td width=\"72\"><p>22%</p></td>\n <td width=\"88\"><p>19%</p></td>\n <td width=\"83\"><p>28%</p></td>\n </tr>\n <tr valign=\"TOP\">\n <td width=\"206\"><p><b>Total</b></p></td>\n <td width=\"86\"><p>25%</p></td>\n <td width=\"72\"><p>47%</p></td>\n <td width=\"88\"><p>49%</p></td>\n <td width=\"83\"><p>49%</p></td>\n </tr>\n </tbody>\n</table>\n<p>Source: Palantir.</p>\n<p>In the first half of 2021, Palantir signed new and expanded government contracts with the U.S. Army and the Air Force, as well as commercial contracts with big companies like <b>Rio Tinto</b>, <b>PG&E</b>, and <b>BP</b>.</p>\n<p>Palantir also closed a growing number of larger deals. It closed 15 deals worth more than $5 million in the first quarter of 2021, but that number doubled to 30 deals in the second quarter. Its average revenue per top-20 customer increased 34% year-over-year to $39 million in the second quarter.</p>\n<p>Those numbers suggest Palantir will grow faster than the analytics, AI, and cybersecurity markets, as well as less diversified enterprise-oriented peers like <b>C3.ai</b> (NYSE:AI), which generated just 17% sales growth last year as its core energy and industrial markets suffered slowdowns during the pandemic.</p>\n<h2>Palantir's stock could easily triple by 2025</h2>\n<p>Palantir isn't profitable on a GAAP basis yet, and its stock isn't cheap at over 30 times this year's sales. However, I believe it can maintain that high price-to-sales ratio if it achieves its goal of generating more than 30% annual sales growth through 2025.</p>\n<p>If that happens, Palantir's stock could more than triple within the next five years. It could remain volatile for the foreseeable future, but its gradual expansion across the government and commercial sectors could generate big profits for patient investors.</p>","source":"fool_stock","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>Where Will Palantir Be in 5 Years?</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\">\nWhere Will Palantir Be in 5 Years?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-19 13:19 GMT+8 <a href=https://www.fool.com/investing/2021/08/18/where-will-palantir-be-in-5-years/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Palantir (NYSE:PLTR) is a divisive stock. The bulls believe the data mining firm will continue to expand across the government and commercial sectors, while the bears believe it's too dependent on ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/08/18/where-will-palantir-be-in-5-years/\">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://www.fool.com/investing/2021/08/18/where-will-palantir-be-in-5-years/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2160573149","content_text":"Palantir (NYSE:PLTR) is a divisive stock. The bulls believe the data mining firm will continue to expand across the government and commercial sectors, while the bears believe it's too dependent on government contracts, its commercial business faces too many competitors, and its stock is too expensive. Palantir's volatility reflects that battle. It went public via a direct listing last September, started trading at $10 per share, surged to an all-time high of $45 in late January, and now trades in the mid $20s.\nHowever, Palantir recently posted a strong second-quarter report and reiterated its guidance for annual revenue growth of more than 30% from 2021 to 2025. That rosy forecast suggests Palantir's revenue could rise from $1.1 billion in fiscal 2020 to over $4 billion in fiscal 2025. Let's see how Palantir intends to maintain that robust growth rate, and where its stock might be headed over the next five years.\nImage source: Getty Images.\nThe secular growth of its core markets\nPalantir's Gotham platform serves government clients, while its Foundry platform mainly serves commercial clients. Its cloud service Apollo provides constant software updates for both platforms.\nGotham and Foundry both gather large amounts of data from disparate sources, analyze those findings with artificial intelligence (AI) algorithms, then use the results to help organizations make data-driven decisions. They also secure organizations' data with cybersecurity services.\nFor example, Gotham helps the U.S. military gather intel to plan missions, while Foundry helps large companies like Airbus optimize their operations, cut costs, and develop new strategies. Therefore, Palantir should benefit from the secular expansion of the data analytics, AI, and cybersecurity markets.\nThe big data and business analytics market could grow at a CAGR of 10.9% between 2020 and 2027, according to Allied Market Research, while Facts & Factors expects the AI market to expand at a CAGR of 35.6% between 2021 and 2026. The cybersecurity market could also grow at a CAGR of 9.7% from 2021 to 2026, according to Markets and Markets.\nPalantir's platforms bundle together services from all three expanding markets. It could also grow much faster than its industry peers in all three markets as it leverages its hardened reputation for managing military divisions and government agencies to secure more commercial clients.\nMore commercial spending, more government spending\nPalantir served eight Fortune 100 companies, 12 Global 100 companies, and 24 Global 300 companies at the end of fiscal 2020. During the fourth-quarter conference call in February, COO Shyam Sankar said those low penetration rates represented an \"immense and growing\" opportunity for Palantir's commercial business. During the first-quarter conference call in May, Sankar said Palantir still only had a \"handful of Fortune 500 customers\" and accounted for \"less than one-tenth of a percent of annual defense spending.\"\nIf we look back at Palantir's growth rates, we can see why the bulls are so excited. If Palantir can generate these kinds of growth rates while reaching only a fraction of its total addressable markets, it could grow significantly larger as those penetration rates rise.\n\n\n\n\nRevenue Growth (YOY)\nFY 2019\nFY 2020\nQ1 2021\nQ2 2021\n\n\nGovernment\n35%\n77%\n76%\n66%\n\n\nCommercial\n17%\n22%\n19%\n28%\n\n\nTotal\n25%\n47%\n49%\n49%\n\n\n\nSource: Palantir.\nIn the first half of 2021, Palantir signed new and expanded government contracts with the U.S. Army and the Air Force, as well as commercial contracts with big companies like Rio Tinto, PG&E, and BP.\nPalantir also closed a growing number of larger deals. It closed 15 deals worth more than $5 million in the first quarter of 2021, but that number doubled to 30 deals in the second quarter. Its average revenue per top-20 customer increased 34% year-over-year to $39 million in the second quarter.\nThose numbers suggest Palantir will grow faster than the analytics, AI, and cybersecurity markets, as well as less diversified enterprise-oriented peers like C3.ai (NYSE:AI), which generated just 17% sales growth last year as its core energy and industrial markets suffered slowdowns during the pandemic.\nPalantir's stock could easily triple by 2025\nPalantir isn't profitable on a GAAP basis yet, and its stock isn't cheap at over 30 times this year's sales. However, I believe it can maintain that high price-to-sales ratio if it achieves its goal of generating more than 30% annual sales growth through 2025.\nIf that happens, Palantir's stock could more than triple within the next five years. It could remain volatile for the foreseeable future, but its gradual expansion across the government and commercial sectors could generate big profits for patient investors.","news_type":1},"isVote":1,"tweetType":1,"viewCount":129,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
