Palantir Gets Interesting At $5

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Palantir Gets Interesting At $5

seekingalpha2022-05-22

SummaryRecently there have been many reports of "smart money" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...

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Comment（143）

JMheart
·2022-05-23
Thanks for sharing!
Reply
1
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Jess261
·2022-05-23
Okay
Reply
1
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Heyminnie
·2022-05-23
[Happy]
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1
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JLKang
·2022-05-23
Not interested for now
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keegs
·2022-05-23
Like
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1
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KeeBoonTong
·2022-05-23
Lalalala
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Gackky
·2022-05-23
Tsla gets interesting at $5
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3
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Looyusooi
·2022-05-23
Ok
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Bodoh
·2022-05-23
Ok
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Alice13688
·2022-05-23
If really $5, will buy more to DCA.
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3
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Steven Tay
·2022-05-23
Nice
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2
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Nebhol
·2022-05-23
Like
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1
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FattyBull
·2022-05-23
Nice
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2
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Wtt
·2022-05-23
K
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1
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Ironman2002
·2022-05-23
On the brighter side, $5 is a good opportunity to DCA
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4
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Bspn
·2022-05-23
Ok
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2
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newtoUS
·2022-05-23
Ok
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3
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MelChen
·2022-05-23
Great
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1
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Miketee74
·2022-05-23
All these evaluator has agenda at the back. As investor, be careful on comments. Is theirearning expectation could be 100% accepted as the Correct justification?
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andrew123
·2022-05-23
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It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","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":1},"commentList":[{"id":9028765113,"gmtCreate":1653280148932,"gmtModify":1676535253360,"author":{"id":"4091672806332690","authorId":"4091672806332690","name":"JMheart","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"hat":"https://static.tigerbbs.com/646756f1284a5a6480ed02cc4fa7d1d2","crmLevel":6,"crmLevelSwitch":0,"idStr":"4091672806332690","authorIdStr":"4091672806332690"},"htmlText":"Thanks for sharing!","listText":"Thanks for sharing!","text":"Thanks for sharing!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028765113","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028786899,"gmtCreate":1653278178711,"gmtModify":1676535253034,"author":{"id":"3586490638953193","authorId":"3586490638953193","name":"Jess261","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3586490638953193","authorIdStr":"3586490638953193"},"htmlText":"Okay","listText":"Okay","text":"Okay","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028786899","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028733250,"gmtCreate":1653274536170,"gmtModify":1676535252262,"author":{"id":"4114682744788502","authorId":"4114682744788502","name":"Heyminnie","avatar":"https://community-static.tradeup.com/news/35f6a83a369819d840168698935ff66b","vip":1,"crmLevel":1,"crmLevelSwitch":1,"idStr":"4114682744788502","authorIdStr":"4114682744788502"},"htmlText":"[Happy]&nbsp;","listText":"[Happy]&nbsp;","text":"[Happy]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028733250","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028797708,"gmtCreate":1653274312104,"gmtModify":1676535252193,"author":{"id":"4094622337222610","authorId":"4094622337222610","name":"JLKang","avatar":"https://static.tigerbbs.com/33ab643c577c9cadc6055155d6382c3a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4094622337222610","authorIdStr":"4094622337222610"},"htmlText":"Not interested for now&nbsp;","listText":"Not interested for now&nbsp;","text":"Not interested for now","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028797708","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028701221,"gmtCreate":1653272391763,"gmtModify":1676535251800,"author":{"id":"3577084956936337","authorId":"3577084956936337","name":"keegs","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3577084956936337","authorIdStr":"3577084956936337"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028701221","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028701858,"gmtCreate":1653272370374,"gmtModify":1676535251792,"author":{"id":"3578717603960999","authorId":"3578717603960999","name":"KeeBoonTong","avatar":"https://static.tigerbbs.com/815864515bc02d554ba00b04f5f46a1a","vip":1,"hat":"https://static.tigerbbs.com/6444b4970948c1077534c593eccd6d16","crmLevel":4,"crmLevelSwitch":1,"idStr":"3578717603960999","authorIdStr":"3578717603960999"},"htmlText":"Lalalala","listText":"Lalalala","text":"Lalalala","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028701858","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028474042,"gmtCreate":1653271793386,"gmtModify":1676535251491,"author":{"id":"3574326723774097","authorId":"3574326723774097","name":"Gackky","avatar":"https://static.tigerbbs.com/5898b44bf5a31bf2b9d4e37227ed8177","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3574326723774097","authorIdStr":"3574326723774097"},"htmlText":"Tsla gets interesting at $5","listText":"Tsla gets interesting at $5","text":"Tsla gets interesting at $5","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028474042","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028458722,"gmtCreate":1653270038166,"gmtModify":1676535250984,"author":{"id":"4100437715079400","authorId":"4100437715079400","name":"Looyusooi","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4100437715079400","authorIdStr":"4100437715079400"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028458722","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028453777,"gmtCreate":1653269896099,"gmtModify":1676535250950,"author":{"id":"3559859558754319","authorId":"3559859558754319","name":"Bodoh","avatar":"https://static.tigerbbs.com/349218ea2852130ca86ce660b4aa2d59","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3559859558754319","authorIdStr":"3559859558754319"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028453777","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028494464,"gmtCreate":1653266005158,"gmtModify":1676535249387,"author":{"id":"3586679885462932","authorId":"3586679885462932","name":"Alice13688","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586679885462932","authorIdStr":"3586679885462932"},"htmlText":"If really $5, will buy more to DCA.&nbsp;","listText":"If really $5, will buy more to DCA.&nbsp;","text":"If really $5, will buy more to DCA.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028494464","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028496154,"gmtCreate":1653265846878,"gmtModify":1676535249010,"author":{"id":"4099285253763630","authorId":"4099285253763630","name":"Steven Tay","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"4099285253763630","authorIdStr":"4099285253763630"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028496154","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028570767,"gmtCreate":1653264510059,"gmtModify":1676535248333,"author":{"id":"3567411499210880","authorId":"3567411499210880","name":"Nebhol","avatar":"https://static.tigerbbs.com/b0bfc2a45b91e41a283614268857b3a5","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3567411499210880","authorIdStr":"3567411499210880"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028570767","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028545826,"gmtCreate":1653264269665,"gmtModify":1676535248265,"author":{"id":"4115527649974162","authorId":"4115527649974162","name":"FattyBull","avatar":"https://community-static.tradeup.com/news/373415101d06ff7417c1853d1330e794","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":5,"crmLevelSwitch":0,"idStr":"4115527649974162","authorIdStr":"4115527649974162"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028545826","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028541741,"gmtCreate":1653264134283,"gmtModify":1676535248191,"author":{"id":"3569796947257349","authorId":"3569796947257349","name":"Wtt","avatar":"https://static.tigerbbs.com/7406dcbfb02a072a2aa86f3c4d10c168","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3569796947257349","authorIdStr":"3569796947257349"},"htmlText":"K","listText":"K","text":"K","images":[],"top":1,"highlighted":2,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028541741","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028543045,"gmtCreate":1653264072787,"gmtModify":1676535248143,"author":{"id":"4094301913132990","authorId":"4094301913132990","name":"Ironman2002","avatar":"https://static.tigerbbs.com/784449fc945cf9d5c7b81316e20a221c","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"4094301913132990","authorIdStr":"4094301913132990"},"htmlText":"On the&nbsp;brighter side, $5 is a good opportunity to &nbsp; DCA","listText":"On the&nbsp;brighter side, $5 is a good opportunity to &nbsp; DCA","text":"On the brighter side, $5 is a good opportunity to DCA","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028543045","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028540403,"gmtCreate":1653264035302,"gmtModify":1676535248110,"author":{"id":"3582502134655895","authorId":"3582502134655895","name":"Bspn","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3582502134655895","authorIdStr":"3582502134655895"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028540403","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028555406,"gmtCreate":1653263908705,"gmtModify":1676535248028,"author":{"id":"3575929769091766","authorId":"3575929769091766","name":"newtoUS","avatar":"https://static.tigerbbs.com/9b8dfb089132dd6830b3d50bd9ba1db2","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3575929769091766","authorIdStr":"3575929769091766"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028555406","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028555222,"gmtCreate":1653263877166,"gmtModify":1676535248027,"author":{"id":"3579516203633444","authorId":"3579516203633444","name":"MelChen","avatar":"https://static.tigerbbs.com/7dc83c4dd359a76b490cbb2309bb1eee","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3579516203633444","authorIdStr":"3579516203633444"},"htmlText":"Great","listText":"Great","text":"Great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028555222","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028558340,"gmtCreate":1653263701280,"gmtModify":1676535247941,"author":{"id":"3585785590601618","authorId":"3585785590601618","name":"Miketee74","avatar":"https://community-static.tradeup.com/news/09ea58a03e562828bff08f7347bbcdb4","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3585785590601618","authorIdStr":"3585785590601618"},"htmlText":"All these evaluator has agenda at the back. As investor, be careful on comments. Is theirearning expectation could be 100% accepted as the Correct&nbsp;justification?&nbsp;","listText":"All these evaluator has agenda at the back. As investor, be careful on comments. Is theirearning expectation could be 100% accepted as the Correct&nbsp;justification?&nbsp;","text":"All these evaluator has agenda at the back. As investor, be careful on comments. Is theirearning expectation could be 100% accepted as the Correct justification?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028558340","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9028551090,"gmtCreate":1653263608610,"gmtModify":1676535247911,"author":{"id":"3576260758860416","authorId":"3576260758860416","name":"andrew123","avatar":"https://community-static.tradeup.com/news/f2a1eaba26272212d42018e60e78b422","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":5,"crmLevelSwitch":0,"idStr":"3576260758860416","authorIdStr":"3576260758860416"},"htmlText":"Like&nbsp;","listText":"Like&nbsp;","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9028551090","repostId":2237089312,"repostType":4,"repost":{"id":"2237089312","kind":"highlight","pubTimestamp":1653201031,"share":"https://ttm.financial/m/news/2237089312?lang=&edition=fundamental","pubTime":"2022-05-22 14:30","market":"us","language":"en","title":"Palantir Gets Interesting At $5","url":"https://stock-news.laohu8.com/highlight/detail?id=2237089312","media":"seekingalpha","summary":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its dr","content":"<html><head></head><body>Summary<ul><li>Recently there have been many reports of &#34;smart money&#34; investors buying PLTR following its drop to $8.</li><li>It&#39;s true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.</li><li>The stock remains fairly expensive.</li><li>In this article, I rate Palantir a &#34;hold&#34; (neutral) and explain why I&#39;d switch that rating to &#34;buy&#34; at $5.</li></ul><img src=\"https://static.tigerbbs.com/b0cbdef35ea2b08c8aeb69a0d8ba11ec\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/>Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:<ul><li>Palantir is only doing $9 million worth of stock-based compensation this year.</li><li>The average Foundry customer spent $6.5 million on the service last year.</li><li>He has 100% of his own money invested in Palantir.</li></ul>These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:<ul><li>Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.</li><li>Cognizant (CTSH) - an IT consulting company.</li></ul>These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:<ul><li><a href=\"https://laohu8.com/S/IBM\">IBM</a> (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.</li><li>Tyler Technologies (TYL) - a data service works with government clients.</li><li>Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.</li></ul>The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:<ul><li>67 times adjusted earnings.</li><li>9.7 times sales.</li><li>7 times book value.</li><li>65 times operating cash flow.</li></ul>These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:<ul><li>Tesla (TSLA).</li><li>Shopify (SHOP).</li><li>Netflix (NFLX).</li><li>Peloton (PTON).</li></ul>PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:<ul><li>Base year: $0.11</li><li>Year 1: $0.144</li><li>Year 2: $0.188</li><li>Year 3: $0.25</li><li>Year 4: $0.323</li><li>Year 5: $0.424</li></ul>According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:<img src=\"https://static.tigerbbs.com/cfa3518f38fdfa46b5a3456f1e7422d4\" tg-width=\"1208\" tg-height=\"289\" referrerpolicy=\"no-referrer\"/>As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:<ul><li>Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.</li><li>Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.</li><li>Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.</li></ul>The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.</body></html>","source":"seekingalpha","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 Gets Interesting At $5</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 Gets Interesting At $5\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-22 14:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent ...\n\n<a href=\"https://seekingalpha.com/article/4513624-palantir-gets-interesting-at-5\">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/4513624-palantir-gets-interesting-at-5","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2237089312","content_text":"SummaryRecently there have been many reports of \"smart money\" investors buying PLTR following its drop to $8.It's true that the stock has gotten cheaper than it was in the past, but the most recent quarter showed major deceleration.The stock remains fairly expensive.In this article, I rate Palantir a \"hold\" (neutral) and explain why I'd switch that rating to \"buy\" at $5.Andreas Rentz/Getty Images EntertainmentPalantir (NYSE:PLTR) stock has been on a wild ride these last 12 months. It peaked close to $29 last year and is now at approximately $8. The stock had been sliding before this month’s earnings release. The release was a miss but, surprisingly, the stock rose in the weeks after it came out. After dipping 2.28% on the day of the release, PLTR recovered, rising 10.8% by Friday’s close.Why did PLTR rise despite missing on earnings?It might have had something to do with management’s statements. In the earnings call that took place after Palantir’s earnings release came out, CEO Alex Karp hit on all the right notes. Among other things, he said:Palantir is only doing $9 million worth of stock-based compensation this year.The average Foundry customer spent $6.5 million on the service last year.He has 100% of his own money invested in Palantir.These comments may have eased investors’ nerves. The last one, in particular, showed that Karp was 100% invested in his own company, indicating high conviction from an important insider.Nevertheless, PLTR’s Q1 release provided some real causes for concern. It featured the company’s slowest revenue growth in years, as well as a GAAP net loss. 16% growth in government revenue was particularly concerning, as that segment has always been considered Palantir’s bread and butter. Given all of these concerns, I would hold off on buying PLTR stock for now. I do, however, think that there is a price at which the stock becomes interesting, and I will spend the remainder of this article explaining why $5 is that price.Palantir’s Competitive PositionOne of the reasons why Palantir has a non-zero value, despite its endless losses, is because of its competitive position. PLTR locks in government contracts with long lifespans, and it faces little competition in its niche. So, it has a significant amount of recurring revenue.Many online services have attempted to come up with lists of Palantir competitors but most are not true “head to head” competitors. For example, Craft.co has a list of Palantir’s competitors, featuring some questionable inclusions. It lists:Tableau, a data visualization suite that does not include many of the features of Foundry and Gotham.Cognizant (CTSH) - an IT consulting company.These companies do offer data analytics, which makes them superficially similar to Palantir. However, they don’t offer comprehensive data platforms aimed mainly at Federal Government agencies, so they aren’t head-to-head competitors. However, a few possible contenders for “true competitors” stand out:IBM (IBM) - has numerous data platforms going after clients in the financial services sector, one of Palantir’s big client bases.Tyler Technologies (TYL) - a data service works with government clients.Alteryx (AYX) - a data platform that mostly works with private sector clients but does list some government clients on its case study page.The above are probably Palantir’s closest competitors. They resemble PLTR in some respects. However, they do not have Palantir’s specific expertise in managing data for intelligence and military operations. So, Palantir is uncontested in that sub-niche.It’s a bit of a different story in the commercial part of Palantir’s business. In that space, PLTR faces dozens of competitors, and only has a 2.4% market share. Businesses that want general purpose data analytics have many options to choose from, so Palantir will have a harder time standing out in the commercial space.ValuationAs I showed in the previous section, Palantir enjoys an admirable competitive position in providing data analytics for Military and Intelligence agencies. Its overall position in big data and machine learning is not mind blowing, but it at least has one niche locked down. This fact means that Palantir’s stock is not at risk of going to zero. Government revenue is extremely stable, as it’s backed by taxing authority, and Palantir’s government contracts last 3.5 years on average.So, without a doubt, Palantir stock is worth some positive amount of money based on its fundamentals. As for how much it’s worth, we need to look at the stock’s valuation. According to Seeking Alpha Quant, PLTR trades at:67 times adjusted earnings.9.7 times sales.7 times book value.65 times operating cash flow.These are frankly extremely high multiples these days. In 2021, at the height of the post-COVID bubble, numbers like these weren’t unheard-of. But this year, the Federal Reserve is raising interest rates and investors are taking a long, hard look at expensive companies. If you look at the stocks that have suffered notable 50%+ declines this year, it’s practically a who’s who of last year’s expensive tech stocks:Tesla (TSLA).Shopify (SHOP).Netflix (NFLX).Peloton (PTON).PLTR, like these stocks, has gone down in price. However, its multiples remain high. Enough so that we might wonder whether it has further to fall. Additionally, PLTR’s revenue growth decelerated significantly in its most recent quarter–though it remained fairly high at 31%.So there’s some basis here for thinking that PLTR has further to fall. To gauge how much further it has to fall, we need to do a discounted cash flow analysis. According to its cash flow statements, PLTR had $0.11 in free cash flow per share in the trailing 12 month period. There is no historical pattern in cash flows we can ascertain because free cash flow only became positive last year. However, we know that Palantir’s revenue is growing at 31%. If FCF grows in proportion to revenue, then the next five year’s cash flows will be:Base year: $0.11Year 1: $0.144Year 2: $0.188Year 3: $0.25Year 4: $0.323Year 5: $0.424According to Finbox, Palantir’s weighted average cost of capital is 8.62%. If we use that as the discount rate, then five years’ cash flows can be discounted as shown below:As you can see, the five years’ cash flows have approximately $1 in present value.Next, we need a terminal value. If we assume growth tapers off to 0% after five years, then our final year’s cash flow is 0.424. The discount rate minus the growth rate is 3.62%. So we get a terminal value of $4.91. That plus the five year’s cash flows gives us a fair value of $5.91.Now, I’ve been pretty conservative here by estimating sustainable growth at 0%. If you use 5% instead of 0% then you get to a fair value of $13.58. Potentially, Palantir could grow faster and longer than that. But when making estimates, it pays to be conservative. So, $5.91 is a “safe” estimate of fair value.Risks and ChallengesAs we’ve seen, Palantir stock would be a pretty safe bet at $5. If it kept up its growth, it could even be worth as much as $13.58. If the stock dips much further then, an investor probably would do well buying it. However, we aren’t quite done. Before endorsing any thesis on a stock, we need to consider the risks to shareholders, and the challenges to the thesis. In Palantir’s case, there are a good few of these. A few of the most notable are:Deceleration. My basic PLTR model yielded $5.91 in present value with a sustainable growth rate of 0%, and $13.58 with a sustainable growth rate of 5%. Neither of these growth rates are over the top. The assumption of 0% growth after five years is rather conservative. However, I nevertheless assumed that PLTR’s FCF growth can stay at 31% for five full years before the deceleration kicks in. Should deceleration kick in before five years, then the fair value will end up being lower than what I’ve estimated here.Stock based compensation. One factor arguing that Palantir isn’t just another overhyped growth stock is its positive FCF. The company is certainly turning a “profit” in cash flow terms. However, one of the ways Palantir keeps its cash flows high is through stock based compensation. It pays its employees in heavy amounts of stock, which keeps cash costs low as it results in lower salary expense. As a result of paying out so much stock, PLTR’s share count doubled in the year following its IPO. The more shares hit the float, the less each investor’s percentage claim on earnings, and the more potential selling pressure there is. So, continued dilution via SBC is a major risk factor for PLTR stock.Loss of major contracts. Although Palantir’s long contract duration ensures revenue stability in the medium term, it may not be as reliable in the long term. Governments can and do cancel relationships with contractors. Sometimes, they do so for political reasons. For example, in 2021, Palantir lost a contract with a UK Health Authority due to data privacy concerns. For now, it doesn’t look like PLTR is at risk of having this happen with any U.S. clients. But it’s always a possibility, and it could cost shareholders real money.The Bottom LineThe bottom line on Palantir is that it’s a real, cash flow positive company whose stock is unfortunately a bit overvalued right now. There is no question that Palantir is growing and maybe even profitable by some metrics. But its growth isn’t quite fast enough to justify its current stock price. It would take $5.91 or lower for PLTR to become interesting.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":1127,"commentSize":143,"repostSize":0,"favoriteSize":4,"likeStatus":false,"favoriteStatus":false}}