And I saw that as of end of 2020, they had 1.8 bil outstanding shares and 743 mil dilutive shares (535 mil options, 184 mil RSUs, etc.) First, the company is growing its commercial revenue. Palantir Technologies (PLTR) has an average rating of hold and price targets ranging from $4.50 to $15, according to analysts polled by Capital IQ. Further, backtesting allows the security selection methodology to be adjusted until past returns are maximized. At an annualized $1.57 billion and a $45.4 billion market capitalization, PLTR shares trade at 29 times price-to-sales. government.". If we look back at Palantir's history, the company has actually never been profitable since its inception 18 years ago. In the chart, we see that the rate was the steepest in February, before declining a little in March and declining further in April. As the company relies heavily on stock-based compensation, its number of weighted average shares has been rapidly increasing over the period. And the companys overall revenue was up 36% YOY at $392 million. 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. Palantir had a share price of $30. We must not let PLTR off the hook. Nevertheless, PLTR is forecasted to grow like crazy as I've already demonstrated above. Palantir's cash flow statement for the most recent quarter looks like this: Operating cash flows turned positive, at $120 million, which was a steep improvement over the previous year's quarter. Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. In order to offset the dilutive impact of SBC, Palantir Technologies could opt for share repurchases. Palantir Technologies Inc. stock rises Monday, outperforms market Jan. 9, 2023 at 5:18 p.m. Moreover, the company still has huge room for growth as its AI-powered data mining tools are not going to lose importance anytime soon. The value score is 42/100. 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. And as Hake notes, even if investors have to wait two years for the stock to hit that target, they would still get an average annual return of 29.54%. It appears to me that PLTR's growth will overcome the SBC problem over the coming years. Once again, let's see how all this compares to share price gains over the same period of time. I have no business relationship with any company whose stock is mentioned in this article. values the company at around $40 billion. The Motley Fool owns and recommends C3.ai, Inc. and Palantir Technologies Inc. The DCF valuation employs the Free Cash Flow to the Firm (FCFF) methodology to arrive at the intrinsic value of the company. 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. Quarterly Results SEC Filings / Governance. It is said that back in 2011, the U.S. Army had reportedly used Gotham to track down Osama Bin Laden. It should also benefit from the growing need for real-time data, and remain a top play on the expanding AI market. WebTo give you an idea of how many shares were covered under the 2010 Plan, this is from the S-1 (emphasis mine): As of June 30, 2020, options to purchase 308,905,744 shares of I remain bullish. 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. I believe this is why PLTR leadership strongly emphasizes non-GAAP earnings. Proven research methods championed by growth stock investors like Peter Lynch, Richard Koch, and Phil Fisher. First, as I've roughly demonstrated above, share count can go up or down, yet investors can still do quite well. The same was true for many other companies in a similar position, e.g. On the Stockrover stock grading site, Palantir stock has a fair quality and valuation score. Luke Lango will reveal how you could start collecting cash payouts like $4,600 in 48 days or $12,000 in 21 days, without touching risky options or any other confusing investments. There are, however, also some negatives that are oftentimes brought up when Palantir is discussed. On the other hand, CRM increased share count rather substantially and didn't quite make it over 300% price appreciation. Nevertheless, 287% is still quite robust. Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. *Average returns of all recommendations since inception. It'll work out. I appreciate your feedback, comments and questions. Buyer Beware! Is This an Income Stream Which Induces Fear? Analyst Report: Palantir Technologies Inc. NYSE - Nasdaq Real Time Price. We essentially have built a food ontology that provides nutrition in mission critical systems. The portfolio's price can fluctuate, but the income stream remains consistent. Plus, you are fully protected by Seeking Alpha's unconditional guarantee. The primary goal of the Cash Flow Kingdom Income Portfolio is to produce an overall yield in the 7% - 10% range. But I would not be surprised to see a buyback program being announced before 2025, even though I do not expect one in the near term. Please disable your ad-blocker and refresh. 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. Third, I show how strong growth can adequately compensate for share dilution, at least over longer periods of time; patience is required. Instead, it's a drag. In the last quarter, Palantir reported a 37% year-over-year (YOY) increase in commercial revenue. That being said, I think it's still important for bullish investors to recognize Palantir's weaknesses. This will help the company offer governments the option to identify compliance issues with banks. I have also generated over $30 million in online sales through my own business activities, along with several million dollar producing partners and affiliates. Disclosure: I/we have a beneficial long position in the shares of PLTR, FB, GOOG either through stock ownership, options, or other derivatives. 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. 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. Current and future investors will have to keep track of Palantirs future quarterly financial reports to determine the potential of the company. Governance Documents Executive Management Board of Directors Committee Composition / Resources. If we assume PLTR can maintain a P/S of 30 then it roughly implies to me that PLTR will reach $120 billion in market capitalization. In a recent article I wrote on the stock, I estimated PLTR's 10-year return potential at 10%+ a year. When employees start to exercise these rights, (1) future dilution and (2) decreased free cash flow will occur, slashing the fair value per share to a lower price. I'll Avoid These Sectors In 2023 3:39AM ET 1/15/2023 Seeking Alpha. Third, its growth in healthcare is rising. from when they initially went public and their dilution ranged from 10-20% (most in the low 10s).What does this mean? In an effort to guard against black swan events, Palantir recently made a large purchase of gold bars. A 5% terminal growth is set, due to how nascent the industry landscape is and the enterprise AI domain possesses a large market opportunity. WebIn addition, there are up to 0.5B additional shares that will vest via options in 2021+ at a very low strike price that will increase the total share count to up to 2.2B and cause a As long as management grows the company faster than it dilutes shareholders, the stock will outperform the index. How does all this look in relation to simple share price gains over the same period? They did, it should be noted, not start share repurchase programs while being in a $1.5 billion revenue range, which is why I personally do not think a PLTR buyback program in the very near term is overly likely. 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. MULN Stock Alert: Does Mullen Have 3,000 Preorders For Its FIVE EV? Google. Palantir SBC is costly and is here to stay, therefore must be incorporated into a financial valuation. Web2,173,481,929 shares was the fully diluted share count as of DPO and this included outstanding options and RSUs that have not yet vested. First, it is seeing more traction with the defense industrial customer. Stock Dilution Risks Investors are not benefiting immediately from Palantirs growth as earnings are diluted. 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. 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. This is almost perfectly in line with the consensus price target of $21.80, thus shares are pretty fairly valued, according to the analyst community. I think it's useful to inspect the narratives. Palantir's stock was trading about 6.3% lower at $22.73 per share on Wednesday at the time of publication. These multiples will be carried forward to our sensitivity analysis. I wrote this article myself, and it expresses my own opinions. Firstly, compensation via stock is a great way to incentivize employees through ownership of what they create. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Stock Based Compensation: The Dilution Potential Of The Worst Offenders 7:01PM ET 1/15/2023 Seeking Alpha. Second, their market cap is $45B not 14.5, which already takes into account the locked shares. To make the world smarter, happier, and richer. Learn More. Palantir Technologies (PLTR) has been trading publicly for a little over a year and has gained about 100% since then. ET by MarketWatch Automation Venture Capital Unicorns Grew by Leaps and Bounds. If history repeats itself, then PLTR stock could set up as a profitable trade. But this is a statistic that requires context. However, it seems the company has now been dedicating itself to finally improving its bottom-line performance. Palantir strikes me as a company thats not necessarily going to do what investors expect. Someone else is enjoying the rewards. Down 65% in This Bear Market, Can Palantir Recover in 2023? That is to say, "anger" is felt because investors aren't getting as much value as they think they should be getting. I wrote this article myself, and it expresses my own opinions. Of course, revenue growth of 30% for the next several years is impressive. We accomplish this by combining several different income streams to form an attractive, steady portfolio payout. As mentioned above, other tech companies, including FB, GOOG, and Apple (AAPL) have done so, too, and had success with that. 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. That balance between sellers and buyers isn't too jarring, but Palantir's stock has also lost about a third of its value over the past three months, and is trading near its 52-week low. I know usual share dilution doesn't affect the company's fundamentals/story, but this seems way too extreme for shareholders to ignore.
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