Second, their market cap is $45B not 14.5, which already takes into account the locked shares. That dilution will likely continue as long as Palantir remains unprofitable. One of, if not THE most heavily compensated CEO of any US company in 2021. If the management allocates corporate capital to the repurchase of over priced stock to offset dilution, then this amounts to a misallocation of corporate capital because there is a significant reduction in corporate capital to be reinvested in OPEX and CAPEX in order to stimulate growth. Is this happening to you frequently? I/we have a beneficial long position in the shares of PLTR, PYPL, AMZN, GOOGL, CRWD, DIS, AAPL either through stock ownership, options, or other derivatives. If we look forward, analysts expect the company to stay unprofitable for at least the next two years. Thankfully for them, government contracts last many years. The value score is 42/100. I think it's useful to inspect the narratives. 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. 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. What did investors not like about Palantirs third-quarter results? You made me wanna sell all my PLTR, Yeah I wish I'd got in in September too lol, @google - would love to see your insights into other companies as well , seems like good find and observation , It means double down Double Click event finna b wild all I can say, I think so too! In total, Palantir grew revenue by 36% year-over-year to $392 million. Cornerstone, Go to company page Now, let's ignore share count just for a moment. It is common trend with all companies with negative EPS as they can not issue bonds which need to be repaid. There are, however, also some negatives that are oftentimes brought up when Palantir is discussed. Buyer Beware! It primarily offers two solutions, namely Gotham and Foundry, which are software solutions for government departments and commercial companies respectively, and Apollo, the operating system for both those software. Gross margins are stronger than the S&P 500 average. Changes in these assumptions may have a material impact on the backtested returns presented. 18 of those deals were valued at $10 million or more. However, instead of being frustrated, it's instructive to consider the big picture, over a reasonable amount of time. A new tech publication by Start it up (https://medium.com/swlh). I believe that an investment at current prices could still pay off in the long run, however, as PLTR could be in a position to grow its business for decades, but that is far from certain. 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%) Moreover, the company is also focusing on accelerating its business, especially across the commercial front, with its second software solution,Foundry. 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. At this point, I've written well over 20 articles on the company. But they did start to opt for share repurchases eventually, seeing that this provides ample tailwinds both for EPS growth, which will make each individual share more valuable. 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. I am an investor, entrepreneur, father, husband, coach and teacher. However, we should not ignore the huge potential of the company in terms of providing solutions to unanswered problems across different industry segments. 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. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. 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. 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. 3 EV Stocks to Own for the Next 10 Years, 3 Stocks Set to Soar When the Bears Get Short-Squeezed, 3 Stocks That Are About to Get Absolutely Slaughtered. Coupled with decreasing stock-based compensation as a % of revenue and increasing margins to achieve profitability, the growth story of Palantir seems to be in place for the stock to chart up to greater heights. 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. 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. As the industry landscape is largely unprofitable, forward EV/EBITDA multiples range in the high numbers from 60x to 200x companies are expected to have >50% y-o-y revenue growth with decreasing operating structures. 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? Palantir is a high-growth company that operates worldwide in both commercial and government segments. 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. Hence, projecting such valuations does not seem realistic and the base cases outcome is recommended. This is somewhat difficult for some investors to remember. If you have an ad-blocker enabled you may be blocked from proceeding. On the other, bears are not wrong to criticize Palantir's cash-burning problem and excessive stock-based compensation, which keeps diluting shareholders to oblivion. Dear MULN Stock Fans, Brace Yourself for a Reverse Stock Split. 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. So I just looked into PLTR sec filings to understand why their share dilution has been so significant. 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. I suspect you are quite familiar with Microsoft (MSFT), Amazon (AMZN), Facebook (FB) and Alphabet (GOOGL). Price as of January 18, 2023, 1:25 p.m. has been a polarizing stock. It'll work out. Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >, Tired of arriving late to the Big Returns Party?. 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. 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 opportunities include leveraging its anti-money laundering and know-your-customer expertise. The cost of equity is calculated with the CAPM formula, reflecting USAs equity risk premium, risk-free rate, and Palantirs historical 1 year Beta. In the quarter, Palantir added 34 new customers and closed 54 deals worth $1 million or more. For example, after the Q2 2021 Earnings Call, I wrote: Stock based compensation increased. I'll come back to that $4 billion in revenue in a minute. 7 Top-Rated Energy Stocks to Fill Up Your Portfolio. 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. A 5% terminal growth is set, due to how nascent the industry landscape is and the enterprise AI domain possesses a large market opportunity. Breaking News Nov 28, 2022. For now, investors should assume the stock is stuck in a $22 $27 trading range because earnings per share are not expanding. Subscribe right now because you get 14 days for FREE. 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). Analyst Report: Palantir Technologies Inc. NYSE - Nasdaq Real Time Price. Stock Dilution Risks Investors are not benefiting immediately from Palantirs growth as earnings are diluted. If history repeats itself, then PLTR stock could set up as a profitable trade. Chris Lauis acontributing author for InvestorPlace.com and numerous other financial sites. Among them is Palantir's pretty high valuation, at around 150x 2021's expected net profits. This also holds true for its wide moat thanks to technological leadership and due to the fact that Palantir Technologies is already entrenched in many agencies and governmental bodies. 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. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. The averagePalantir Technologies price targetof $23.14 implies 25.4% upside potential. This is pretty insane, I had no idea. Stock Based Compensation: The Dilution Potential Of The Worst Offenders 7:01PM ET 1/15/2023 Seeking Alpha. 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. Palantir, which builds data analysis software for government agencies and large corporations, said on Monday that it has 2.17 billion diluted shares. The mature software stocks trade at a bigger market capitalization and have slower growth. That's the point. Facebook (FB) or Alphabet (GOOG) (GOOGL) when they were smaller. If you want to reach out, you can send a direct message here on Seeking Alpha, or an email to jonathandavidweber@gmail.com. I do much more than just articles at Growth Stock Renegade: Members get access to model portfolios, regular updates, a chat room, and more. From Palantirs current financials and its projections at FY21, we can conclude that the companys future growth story for the next 36months is crucial to determine if the stock can experience a surge in price, since its current operating structures in FY21 has experienced a huge improvement with respect to its top line revenue growth. 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. Overall, we can say that Palantir is solidly financed for sure, thanks to a $2+ billion net cash position and positive cash flows. Please. Today, Palantir trades at $22, for a $42 billion market capitalization. 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. Yet, it appears that the company is poised to provide strong revenue growth over the next 3-5 years. I looked up other tech stocks' sec filings (SQ, FB, GOOG, etc.) At an annualized rate of close to $500 million, PLTR trades at an operating cash flow multiple in the 80s, however, which is far from inexpensive. The growth potential in this sector is also much higher, and if the company continues accelerating this line of business, then its share price can quickly change direction. The real question isn't compensation but dilution and share count. MULN Stock Alert: Does Mullen Have 3,000 Preorders For Its FIVE EV? Since trades have not actually been executed, results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity, and may not reflect the impact that certain economic or market factors may have had on the decision-making process. The portfolio's price can fluctuate, but the income stream remains consistent. Please note all regulatory considerations regarding the presentation of fees must be taken into account. But its hard to find fault when the company is growing both sides of the business. Uber, Lucky you got in in September. Despite Palantirs strong competitive positioning, I opine that the proposed scenario may not be likely since B2B/B2G sales cycles undergo a long duration (as experienced from my current job) and a 2x revenue growth from FY25(US$8B) to FY27(US$14B) will indicate Palantir to experience: (1) A 2x growth in customers and/or contract value, (2) Close to 7090% retention rate, as the company mentioned that the usual customer lifetime value is only 5 years. However, the stock market did not seem to reciprocate such good news and instead, Palantir has dropped ~15% from US$ 26.75 to US$22.83 as of 15th Nov 2021. 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). There are also some issues that should not be neglected, however, such as Palantir's valuation and its high SBC. 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 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. Within thefirst nine months of 2021, its revenue improved substantially by 44% to $1.11 billion and the net loss also narrowed down to $364 million from $1.02 billion. Please disable your ad-blocker and refresh. 5 Hypergrowth Stocks With 10X Potential in 2023. Palantir's stock is also down by 84% from its all-time There is, however, also another possibility. Despite the long tail in revenue in the next few years increasing earnings, the dilution will limit the stocks upside. Feast your eyes on their share counts over the last 10 years or so. Third, there's a good reason for SBC and therefore share dilution. The Motley Fool owns and recommends C3.ai, Inc. and Palantir Technologies Inc. Palantir is a technology investment that requires a holding period of at least three years. Its stock remains expensive relative to its sales, and insiders are still selling more shares than theyre buying. Certainly, that's a view in the rearview mirror. 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. 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. patrick wayne children, san jac blackboard password reset, pardot custom reports,
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