Not really. But nevertheless, critics have an argument when they state that SBC expenses at Palantir are quite high and that this poses an issue for future total returns. Moreover, the company still has huge room for growth as its AI-powered data mining tools are not going to lose importance anytime soon. Palantir said in its prospectus that 1.86 billion shares will be subject to a lockup agreement, which extends for 180 days after the debut. Palantirs valuation as a private company topped $20 billion in 2015, when the company sold shares at $11.38 a piece. Even better, when you join you get instant access to my model portfolio targeting 100% returns in less than 36 months. for Palantir. 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. Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. Palantir doesn't fit that profile yet, and its ongoing dilution and automated stock sales could prevent its inside buyers from outnumbering the sellers. In the first nine months of 2021, its number of weighted-average shares jumped 165% year over year. Breaking News Nov 28, 2022. But earlier this year, a leaked government document revealed that Immigration and Customs Enforcement (ICE) wanted to replace FALCON, the agency's customized version of Gotham, with a new in-house platform called RAVEn. Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. Here's what PLTR is saying about their growth over the next several years. The averagePalantir Technologies price targetof $23.14 implies 25.4% upside potential. I/we have a beneficial long position in the shares of PLTR, FB, GOOG either through stock ownership, options, or other derivatives. Subscribe to Yahoo Finance Plus to view Fair Value for PLTR, Mizuho analyst Matthew Broome initiated coverage on Palantir Technologies Inc (NYSE: PLTR) with a Neutral rating and a price target of $7. As costs fall and revenues rise, its quality score will improve. Since then, it has fallen to trade at $18-$19 levels. I wrote this article myself, and it expresses my own opinions. Of particular concern was the approximately 17.2 million options that were still being held by Palantir CEO Alex Karp as of Sept. 30. eBay, Go to company page Perhaps I'm wrong here but to my eyes there's not an obvious correlation between share count and capital gains over 10 years. The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. As long as management grows the company faster than it dilutes shareholders, the stock will outperform the index. I am bullish on PLTR stock. Due to the fact that a high-growth company also has many Best-of-breed growth stock ideas targeting oversized returns. One out of eight analysts have given Palantir a Buy rating, three have Hold ratings, and the remaining four have suggested a Sell. Again, I'm almost certain you've heard of PayPal (PYPL), Salesforce (CRM) and Adobe (ADBE). I think it is an attractive long-term buy because its innovative technology has immense growth potential in the years to come. Forget Tesla! Value investors could buy Microsoft (NASDAQ:MSFT) at 14 times sales or Oracle (NYSE:ORCL) at 6.8 times. For example, C3.ai (AI -0.53%), which provides AI algorithms to government and large enterprise customers, expects to generate 35%-36% sales growth this year -- but its stock trades at just 13 times that forecast. Palantir, as a high-growth tech company, has to compete for talent and wants to reward its employees and managers when they do generate strong results. Third, its growth in healthcare is rising. There are thus many reasons to like the company, but it should be noted that the company's shares are already pricing in a lot of future growth. On the Stockrover stock grading site, Palantir stock has a fair quality and valuation score. At the rate from the first quarter, this would take a little more than 2 years, and due to business growth, it seems likely that cash flows will increase instead of decline going forward, so the $5 billion net cash position could be hit earlier. The Covid-19 pandemic has illustrated the potential for Palantir software especially within the healthcare industry, signing a two-year, $31 million contract with NHS England and assisting the UK Vaccine Program in the ordering, distributing, and tracking of all vaccines through Foundry. I have no business relationship with any company whose stock is mentioned in this article. From that standpoint, Palantirs future prospects make the dilution seem less intimidating. 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. Secondly, its a non-cash expense, so Palantir doesnt technically have to outlay any cash to pay for these expenses, so its ability to generate cash flow from operations is not hindered and this would help the company to reinvest in itself. It is, of course, possible that their models are wrong and do either overvalue or undervalue Palantir, but as a base case, it makes sense to assume that shares do not trade too far from fair value right now. Financials. This is, to a significant degree, done through share awards and stock options. We essentially have built a food ontology that provides nutrition in mission critical systems. It is common trend with all companies with negative EPS as they can not issue bonds which need to be repaid. Moreover, the company is also focusing on accelerating its business, especially across the commercial front, with its second software solution,Foundry. Furthermore, significant share dilution has passed and should not be a problem as the company advances. Since going public as a direct listing in 2020. ) There is, however, also another possibility. That growth, combined with strong margins and cash flow, ought to translate to share price gains despite the friction and grind. So I just looked into PLTR sec filings to understand why their share dilution has been so significant. On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Go to company page Is this happening to you frequently? What did investors not like about Palantirs third-quarter results? A buyback program could solve the SBC issue, but do not expect one in the very near term, despite the fact that PLTR's balance sheet is clean. PLTR won't sink, but there will be a bit of pain to absorb. The forecasted annual earnings growth over the next year is 67% (which News / Events / Financials. Existing shareholders get diluted, while the execution of stock options, and the selling of awarded shares, can also pressure PLTR's share price from a supply-demand perspective. Certain assumptions have been made for modeling purposes and are unlikely to be realized. Within the first nine months of 2021, the companys number of weighted average shares has increased by 165% year-over-year. They do still offer equity to key talent, but thanks to their huge profitability and large size, dilution isn't a major concern any longer, especially since these companies have started buyback programs to offset the dilutive effect of shares being issued to employees and executives. Insider sales are hurting shareholders. Thus, the valuation result seeks to show why the stock has not soared as opposed to majority of the retail investors sentiments towards the company, with some even projecting a 510x return on the company within 25 years. Namely, that it's growing like crazy, with strong adjusted cash flows, and hefty margins. Dear MULN Stock Fans, Brace Yourself for a Reverse Stock Split. Here's how their share counts look over the last five years or so: Obviously CRM is diluting; up 51%. Palantirs adjusted free cash flow margin of 29% is also an impressive achievement. Palantir has never been a profitable companysince its inception. , Palantir recently made a large purchase of gold bars. Foundry has seen an incredible increase in commercial adoption this year, with the number of private sector customers rising by about 135% as of September 30. The primary goal of the Cash Flow Kingdom Income Portfolio is to produce an overall yield in the 7% - 10% range. Could Palantir Become the Next Salesforce? Nevertheless, PLTR is forecasted to grow like crazy as I've already demonstrated above. Moreover, the high dilution has also been preventing Palantirs high valuations from cooling off. Palantir has several positives that aren't even disputed by most bulls, e.g. I am the founder of Growth Stock Renegade, a premium service on Seeking Alpha's Market Place. Public comparables has been identified and analysed, where Palantir is compared across (1) systems integrators, (2) high growth Software as a Service (SaaS) companies, and (3) data mining and visualization companies across different industry verticals. Palantir has a strong moat that gives customers an edge. 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. Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 its. But this is a statistic that requires context. Palantir Might Be Worth the Buy for Patient Investors. ET. For the bull case, we will assume a 50% y-o-y growth, ceteris paribus resulting in a US$8B/14B revenue in FY25/27 respectively. Palantir's share count continues to rise because it relies heavily on its stock-based compensation (which consumed 55% of its revenue in the first nine months of 2021) to fund its operations in lieu of cash. The market's interest in the data mining firm was muted at first, but its stock skyrocketed to $45 per share during the Reddit-fueled rally in late January. These multiples will be carried forward to our sensitivity analysis. 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. 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. , and hefty margins has never been a profitable companysince its inception myself, and its constantly diluting shares! 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