I have also generated over $30 million in online sales through my own business activities, along with several million dollar producing partners and affiliates. Palantir Technologies Inc. stock rises Monday, outperforms market Jan. 9, 2023 at 5:18 p.m. Cornerstone, Go to company page First, it is seeing more traction with the defense industrial customer. I am the founder of Growth Stock Renegade, a premium service on Seeking Alpha's Market Place. 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. It'll work out. Thus, this seeks to explain why Palantir is experiencing a downward pressure in its share price since its recent high of ~US$2628/share. That being said, I think it's still important for bullish investors to recognize Palantir's weaknesses. 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. Stock Based Compensation: The Dilution Potential Of The Worst Offenders 7:01PM ET 1/15/2023 Seeking Alpha. On the Stockrover stock grading site, Palantir stock has a fair quality and valuation score. But this is a statistic that requires context. 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. However, I need to point out a few things. With a market cap of $36 billion, Palantir is still valued at 24 times this year's sales. It's my #1 issue with PLTR. Uber, Lucky you got in in September. Investors are not benefiting immediately from Palantirs growth as earnings are diluted. 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 do much more than just articles at Cash Flow Kingdom: Members get access to model portfolios, regular updates, a chat room, and more. We accomplish this by combining several different income streams to form an attractive, steady portfolio payout. I am not receiving compensation for it (other than from Seeking Alpha). If you have an ad-blocker enabled you may be blocked from proceeding. In the Q3 2021 earnings conference call on Nov.9, he said, legacy compliance solutions are often 2 or more decades behind. Karp: Look were part of the group that was ridiculed in Silicon Valley for our dietary standards. 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. Share dilution So according to their 10-k annual report, they have 1.792 billion outstanding shares and 743 million outstanding options (exercisable in the period of multiple years) as of end of 2020, of which 133 million of them will expire by end of 2022. Its CEO, for example, received a massive $1.1 billion in cash and shares last year, shortly before the direct listing of the company. This is somewhat difficult for some investors to remember. I'll have to review this more closely in a future article. The information is not intended to be used as the basis of any investment decision by a person or entity. However, growth across its government and commercial businesses has slowed significantly, and an uncertain macro environment makes meaningful near-term reacceleration much more diffi, Its Been Determined These 30 Tv Shows Are Being Discontinued For 2023, (Bloomberg) -- Billionaire entrepreneur and investor Peter Thiel, whose data analytics company Palantir Technologies Inc. is vying for a 480 million ($595 million) National Health Service data contract, has described British peoples affection for the state-backed health service as Stockholm syndrome. Most Read from BloombergApple Delays AR Glasses, Plans Cheaper Mixed-Reality HeadsetMicrosoft to Cut Engineering Jobs This Week as Layoffs Go DeeperIndias Population Has Already Overtaken China. All rights reserved. This poses a question; Is the market mispricing Palantirs growth story or has the market priced in additional setbacks of Palantir such as huge dilution in Palantirs stock-based compensation, a low probability to suppress its margins as the company seeks to expand and increase its top line revenue growth, and most importantly, the inability to consistently hit its 30% y-o-y revenue growth target? Palantirs share price has undergone loads of controversy in terms of the forecasted direction and the possibility of a huge potential upside. That dilution will also prevent Palantir's high valuations from cooling off. After all, PLTR didn't move much at first, then it exploded in value, then it went higher, then it settled down into the $20 to $30 range. 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. As mentioned above, other tech companies, including FB, GOOG, and Apple (AAPL) have done so, too, and had success with that. News Events. Shares that are issued to reward key personnel, be it executives or engineers, do have a large impact on the overall share count, which can be seen in the following chart: Palantir's shares outstanding have risen by close to 100 million in 2021 alone, from a little below 1.8 billion to a little less than 1.9 billion. Strong deal value, growing 50% to $3.6 billion, signals strong business ahead. The Upside Potential for SOFI Stock Is Limited. Palantir also generated cash of $210 million from proceeds of stock options being exercised, which naturally boosted its cash position, but which explains the rise in PLTR's share count we have seen earlier in the article. Due to the fact that a high-growth company also has many It should also benefit from the growing need for real-time data, and remain a top play on the expanding AI market. In fact, based on the companys FCF projections. Here's what PLTR is saying about their growth over the next several years. *Average returns of all recommendations since inception. Nasdaq Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. The TipRanks Smart Score performance is based on backtested results. The bulls will argue that Palantir's target of generating more than 30% annual sales growth justifies that higher price-to-sales ratio, but it's easy to find stocks with comparable growth rates at lower valuations. If Palantir was growing its government side of the business at the exclusion of its commercial side, it would be concerning. SBC and share dilution are annoying. Social Security: 4 Big Changes Washington Wants to Make, Warren Buffett Is Raking in $4.84 Billion in Annual Dividend Income From These 6 Stocks, 3 Reasons Tesla Stock Is a No-Brainer Buy in 2023, 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years -- or Sooner, Join Nearly 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. First, the company is growing its commercial revenue. Changes in these assumptions may have a material impact on the backtested returns presented. The averagePalantir Technologies price targetof $23.14 implies 25.4% upside potential. Thanks for pointing this out. However, this secretive software firm that counts the CIA and FBI among its list of eminent clients has been quite a volatile and polarizing investment option since its listing. 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. Analyst Report: Palantir Technologies Inc. NYSE - Nasdaq Real Time Price. TipRanks is a comprehensive research tool that helps investors make better, data-driven investment decisions. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years. 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 Technologies ( PLTR) has been trading publicly for a little over a year and has gained about 100% since then. Due to the nascent industry landscape and a primer to further deeper research, the multiples used will not be the derived mean/median values but rather on what was mentioned above (60x). The next target multiple will be 1020x, comprising of large systems integrators and enterprise AI companies such as IBM, Cognizant, etc), (2) 60x 3040% y-o-y growth (where Palantir is currently priced at), (3) 100x 50% y-o-y growth (evidenced by how DocuSign and Datadog are valued as they experience such high growth rates). For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. Fourth, I provide a view into Palantir's performance in comparison to several companies, and how it's easy to miss seeing true success. eBay, Go to company page In an effort to guard against black swan events, Palantir recently made a large purchase of gold bars. 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. Value investors could buy Microsoft (NASDAQ:MSFT) at 14 times sales or Oracle (NYSE:ORCL) at 6.8 times. Further, backtesting allows the security selection methodology to be adjusted until past returns are maximized. for Palantir. I am not receiving compensation for it (other than from Seeking Alpha). That growth, combined with strong margins and cash flow, ought to translate to share price gains despite the friction and grind. Palantir's stock is also down by 84% from its all-time Since then, it has fallen to trade at $18-$19 levels. ET. 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. I wrote this article myself, and it expresses my own opinions. I remain bullish. 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. MSFT is the only "cannibal" of this bunch. Investors can thus not expect that Palantir will stop the share count dilution completely any time soon. ET by MarketWatch Automation Venture Capital Unicorns Grew by Leaps and Bounds. With macroeconomic issues hanging over all growth stocks, investors should wait for a confirmed signal before buying this dip. Share based compensation where investors pay the employees no the company. Please disable your ad-blocker and refresh. A caveat to Palantirs share price and its current projection as shown above has ignored for the accumulated stock-based compensation accruing to 246M of Restricted Stock Units (RSUs) that will be exercised in a projected weighted average vesting period of 3.2 years (166M current, 80M projected from 20222025). Just as it looked as though Palantir Technologies (NYSE:PLTR) would rally again, its quarterly earnings rained on its parade. The value score is 42/100. Backin 2020,it had generated a revenue of $1.09 billion along with a net loss of $1.17 billion. Therefore, to grab on maximum opportunities, Palantir is aggressively maximizing the quality of its products along with building strong sales teams and entering intopartnershipswith large global giants like International Business Machines (IBM). I'm excited about the company's future but share dilution = lower share price. MULN Stock Alert: Why Are Investors Suing Mullen Automotive? 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