Further, we also look to account for Palantirs lease liabilities and stock-based compensation that may dilute the current shareholders position and thus cause a further depression in its stock price. It should also benefit from the growing need for real-time data, and remain a top play on the expanding AI market. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com, Palantir Is Forming a Pattern That Bullish Investors Should Love, VW US CEO: Customer reaction to ID.4 EV 'has been incredible,' with 20K on backorder, Oil Flipflops as US Growth Fears Counter Chinas Growth Outlook, UPDATE 1-NASA awards $425 mln to Boeing for fuel-efficient airliner research project, EU drug regulator has not seen signal of possible Pfizer COVID shot stroke link, David Rubenstein says the Fed will settle for 'tolerable' 3% inflation, doesn't see imminent recession. There is, however, also another possibility. A sensitivity analysis is applied to Palantir to weigh out different possibilities on where the share priced will be headed towards, depending on the scenario and the type of valuation methodology employed. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. *Average returns of all recommendations since inception. Palantirs government business revenue grew by 77%. Down 67% in 2022, Is Palantir Stock a Buy for 2023? Since then, it has fallen to trade at $18-$19 levels. 18 of those deals were valued at $10 million or more. Is this happening to you frequently? Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. ), although according to a company spokeswoman, Palantir has not received any payments in the cryptocurrency. Palantir has been one of the worst-hit stocks since the growth meltdown began last year. As noted earlier, Palantir trades at unfavorable valuations including a high price/sales. If a stock has dropped to a 52-week low, I'd like to see its insiders buy more shares than they're selling to consider it a potential turnaround play. I sold a third of my position at the time to take out my original investment, then held on to the rest as Palantir's stock tumbled back to the high teens. Its a perfectly legal practice, its just not something investors like to see. And, that's also in line with PLTR's long-term sales view, back from Q4 2020. And when you join, I'll instantly share my actively managed growth stock portfolio. Someone else is enjoying the rewards. The Motley Fool has a disclosure policy. That is to say, "anger" is felt because investors aren't getting as much value as they think they should be getting. Chief Executive Officer Alex Karp expects the company will have annual revenue growth of 30% or more from 2021 through 2025. Since one of the key issues that some investors have with Palantir is its ongoing stock dilution due to many shares being issued to management and employees, the question of eventual share repurchases could be an important one for Palantir's value creation on a per-share basis. Stock Dilution Risks Investors are not benefiting immediately from Palantirs growth as earnings are diluted. Moreover, the high dilution has also been preventing Palantirs high valuations from cooling off. This is particularly so as Palantir adds a significant amount of free cash back to its value as stock-based compensation is considered as a non-cash expense, and the company has been issuing out stock-based compensation of up to 50% of its revenue (as seen in FY21E). I wrote this article myself, and it expresses my own opinions. Today, Palantir trades at $22, for a $42 billion market capitalization. Currency in USD Follow 2W 10W 9M 6.96 -0.05 (-0.71%) At close: January 13 04:00PM EST 6.94 -0.02 (-0.29%) Bears say its close association with the United States government, along with an executive compensation structure that has caused share dilution, make PLTR stock overvalued. Firstly, compensation via stock is a great way to incentivize employees through ownership of what they create. Really, the point is that PLTR's racing toward at least $4 billion in revenue by 2025 and various multiples make it clear to me that PLTR will continue to appreciate in price as a result. Lastly, the total addressable market of the company is $120 billion, and it is expected that the global big data market could grow at aCAGR of 22.4%through 2030. Analyst Report: Palantir Technologies Inc. NYSE - Nasdaq Real Time Price. One way to reduce the impact of SBC would be to lower issuance, i.e. Go to company page History suggests that SBC isn't a stock price killer. MULN Stock Alert: Does Mullen Have 3,000 Preorders For Its FIVE EV? Nevertheless, in 12 months, it's beaten some of the world's best companies. Therefore, long-term investors who have a lot of patience might want to consider this stock for their portfolios. But the good news is that Karp was by far the biggest holder of options. But this is a statistic that requires context. It's still a major thorn in my side. Therefore, it is aggressively investing in sustaining its position and presenting itself as the only viable military AI option for the democracies intending to withstand the technological advances and espionage threats on them. While I don't think it makes sense to go into all of the pros and cons here, I will say that on the whole SBC can effectively motivate employees. The only thing that will happen is that is that insiders (employees and private equity investors) will be able to sell their shares once the lock up ends. Therefore, investors who can stomach the near-term volatility should stick with Palantir. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Right now is the perfect time to subscribe because it's affordable for any budget. Dear MULN Stock Fans, Brace Yourself for a Reverse Stock Split. Thanks for pointing this out. However, I need to point out a few things. Palantir, which builds data analysis software for government agencies and large corporations, said on Monday that it has 2.17 billion diluted shares. I think it's useful to inspect the narratives. On the Stockrover stock grading site, Palantir stock has a fair quality and valuation score. MULN Stock Alert: Why Are Investors Suing Mullen Automotive? There's no dilution happening, they aren't issuing new shares. With a market cap of $36 billion, Palantir is still valued at 24 times this year's sales. General assumptions include: XYZ firm would have been able to purchase the securities recommended by the model and the markets were sufficiently liquid to permit all trading. In turn, banks will respond by strengthening their compliance programs. Disclaimer: This initiated report is only a primer version it does not conduct a deep dive in the software-infrastructure technology market segment, but to incorporate managements overall guidance and analyse the companys operational structure to determine the fair value of the company. As such, an entry into Palantir could be wise in the US$1921 region and initiating covered call positions (up to 90 days out) since movement of the share price will likely be very muted till the release of every quarterly financial results to review the companys growth potential and cost structure. The real question isn't compensation but dilution and share count. Palantir has never been a profitable companysince its inception. Palantir is a high-growth company that operates worldwide in both commercial and government segments. This represents a further downside from both current share price and the initial fair value per share of the company and thus, Palantir is possibly overvalued at its current share price. (You are fully protected by Seeking Alpha's unconditional guarantee.). In fact, based on the companys FCF projections. With the dilution effect accounted for (representing over US$3B in dilution across 246M shares), Palantirs true fair value per share will be priced at US$20.75 via EBITDA multiple method and US$20.18 via terminal growth method. Palantir Technologies Inc. stock rises Monday, outperforms market Jan. 9, 2023 at 5:18 p.m. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. (See Analysts Top Stocks on TipRanks). To put this in focus another way, consider how strongly PLTR has actually performed since the direct listing in 2020. Palantir had a share price of $30. they should be getting. Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. Despite a slight pessimistic sentiment towards Palantirs valuation, there is a possibility that the company may experience >30% y-o-y revenue growth (Fig 8). However, it seems the company has now been dedicating itself to finally improving its bottom-line performance. Of course, revenue growth of 30% for the next several years is impressive. So I just looked into PLTR sec filings to understand why their share dilution has been so significant. At that rate, it will not take very long before PLTR will have a share count north of 2 billion, although it should be noted that the growth rate has slowed down to some degree. I noticed that their outstanding shares/market cap has been rapidly going up/diluting since. Certainly, that's a view in the rearview mirror. Due to the fact that a high-growth company also has many other ways to invest its operating cash flows, apart from using them for buybacks, it seems likely that buybacks will not be a priority in 2021 and 2022, and possibly beyond that. Uber, Lucky you got in in September. Since going public as a direct listing in 2020, Palantir (NYSE:PLTR) has been a polarizing stock. Please. Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. The company works closely with the U.S. Army and the Department of Defense (DoD). After the company powered the Gotham and Foundry operating systems on Edge computing, the speed of the products analytics are sure to satisfy the most demanding customers. Lets take a look at their Government and Commercial business. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. No cash balance or cash flow is included in the calculation. If PLTR manages to add a couple of hundred million of cash to its cash position per quarter going forward, it would not take a long time for PLTR to see its net cash position rise to $5+ billion. Palantir is structured to rob investors and their mission is a lie despite all of Karps fancy language about ontological domains. Share dilution from 244 million at IPO to 1.6 billion. eBay, Go to company page quotes delayed at least 15 minutes, all others at least 20 minutes. reduce the number of new stock options that are awarded to execs and employees. Third, there's a good reason for SBC and therefore share dilution. Gross margins are stronger than the S&P 500 average. If history repeats itself, then PLTR stock could set up as a profitable trade. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. This information is provided for illustrative purposes only. Commercial revenue accounted for 44% of the total in Q3. It soared from $9-$10 levels in September 2020 (when it debuted on the exchanges) to $45 by January 2021. COO Sankar said, We have a very unique opportunity and a diverse footprint that we believe continues to uniquely position us deliver on the necessary transformation in healthcare delivery from operational excellence to complex clinical care.. Join today for less than $2 per day. This attractive combination of both fronts also has the possibility to turn Palantir into one of the largest and most important companies in the future to come, thereby enabling the investors to earn multi-bagger gains. The stock has a 52-week high of $45 and a 52-week low of $14.40. Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 its. 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