To The Moon

In this series, I plan to perform quick checks on some popular stocks. It will be a quick glance into the financial statements of the companies. This is how I screen for companies as part of my fundamental analysis and prequalification.  I hope that this is helpful to better qualify companies for investing.

I have done one on NIO the Chinese EV maker in one of my earlier posts. $NIO Inc.(NIO)$ 

Now, let us look at Palantir:

Income Statement of PLTR from recent years (2018 to TTM)

Observations:

• There is a good trend of increasing revenue.
• There is a good trend of increasing gross profits.
• Unfortunately, this fails to translate into profitability though the EPS is at a recent low of -$0.28 (TTM).
• EPS is improving but it is still at a loss.
• However, the company continues to make losses (net income) since 2018. While the losses average at $500+ million per year (except for 2020 where the annual loss reached $1.166B), there is a concern about business profitability.
• The increase in revenue is matched by an increase in operating expenses (R&D, Sales, General & Administrative).
• Shares continued to be diluted over time.
• Palantir has not been making money since its incorporation in 2003 (almost 20 years).
• At this juncture, I would not proceed to analyze the other financial statements.

My investing muse

Palantir is one of the darlings in the world of data science and its ability to aid in planning and decision-making. I love the business solutions that they offer. Alex Karp (CEO) remains a patriot and has chosen to serve only USA and their allies. This means that there is a cap on how much the business can grow. They have offered solutions to governments and have made good inroads into non-government (commercial) industries. With a high-security clearance, they are poised to bid for more governmental projects in the coming years.

Customer spotlight from their corporate website

Yet, the bottom line remains that Palantir needs to become profitable. From the recent earnings, I have concerns about their employee stock-based expenses and they “may” have issues with scalability. This is non-conclusive but their expenses grow in tandem with the sales that they brought in. Almost 20 years later, they have yet to make a profit.

I am not sure if there are fundamental management issues or if they are yet to achieve critical mass for breakeven. This remains a stock on my watchlist. For now, I am a spectator as I hold my positions. These were previously bought when I do not include financial analysis in my prequalifying. I would not be adding to my current positions as I look forward to a turnaround. I look forward to their earnings convincing me to invest in them again.

@TigerStars

$Palantir Technologies Inc.(PLTR)$