Palantir ($PLTR) is developing AI platform to help commercial and militaries make better decisions, stock popped today on the news.
Palantir Technologies, founded by Peter Thiel, is a software company that specializes in big data analytics. The company’s software platform, Foundry, is used by governments and businesses to collect, store, and analyze large amounts of data. PLTR went public in September 2020 and its stock has been on a volatile ride since then.
PLTR’s stock price has been on a downward trend since its peak in January 2021. The stock is currently trading at around $8 per share, which is down from its all-time high of $45 per share.
Bulls
1. The company turned profitable first time in Q4 2022, showing the company is well-positioned to benefit from the growing demand for big data analytics. Palantir’s Foundry platform is one of the most advanced big data analytics platforms on the market, and the company is growing rapidly.
2. Palantir has strong secular tailwinds behind its back as the AI/ML market is expected to grow rapidly due to the exponential increase in data harvested by organizations.
3. With products targeting both commercial and governmental clients, Palantir has a distributed top line with the noncyclical governmental revenue insulating the firm’s top line during lean times. Palantir’s focus on modular sales could potentially lead to substantially more commercial clients, which the firm could subsequently upsell
Bears
1. Insiders are selling. Executives (including their CEO) are selling millions of value of stock starting this year at 8ish dollar price point. The large amount of insider selling action shows they are bearish about the stock or the overmarket, either way, they expect the stock price will go down further. Put money where your heart is, right?
2. PLTR’s business is highly dependent on government contracts. The company’s largest customer is the U.S. government, and any changes in government spending could have a major impact on PLTR’s business.
3. Palantir’s executive team has made questionable strategic decisions in the past. While past performance isn’t necessarily indicative of future results, these missteps should be considered by potential investors.
Analysts estimate that Palantir’s stock is worth $9 per share. They predict that the company’s revenue will grow at a compound annual growth rate of 22.5% over the next five years. They expect the majority of this growth to come from commercial clients, as Palantir expands its customer base. They also expect Palantir to continue to expand sales within its existing client base.
In my opinion, If the economy does enter a recession, it is possible that Palantir could see a decline in revenue and profits. However, the company is well-positioned to weather a downturn, as it has a strong balance sheet and a loyal customer base. The stock is very volatile, so please consider the high risk before making any investment decisions.
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