Why Palantir shares are popular with some investors


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Palantir (NYSE:PLTR) is a widely followed action and is a cult favorite on Reddit r / WallStreetBets and elsewhere. The daily trading volume of PLTR shares is often around 50 million shares.

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Considering the unfavorable valuations of the company, insider selling and lack of profitability, why do the markets like this stock so much?

PLTR Stock is considered by some to be the next Facebook

Peter Thiel, Nathan Gettings, Joe Lonsdale, Stephen Cohen and Alex Karp founded Palantir in 2003. Thiel being an early angel investor in Facebook (NASDAQ:FB), some investors concluded that Palantir would be a big winner.

PLTR’s stock has already nearly doubled since its IPO. But after falling from its high of $ 45, the stock was hit by the Nasdaq sudden correction that started in February. Still, the small contracts Palantir won continued to fuel sentiment towards the name.

After winning over clients in the military, government and health sectors, Palantir received on May 28 a $ 111 million contract by the United States Operations Command. He chose Palantir because of his previous use of the company’s platform for real-time missions. Palantir’s software will aggregate data from different sources to enable better decision making.

Palantir’s global chief defense officer said, “When special operators risk their lives in safe scenarios, they deserve technology that works. The confident tone of the executive is supported by the company’s past contracts with the government. Expect more such offers from Palantir, and be prepared for his contracts to expand over time.

On May 24, Palantir said the US Space Force gave the company a $ 32.5 million contract, expand the partnership of entities

Strong first quarter results

For the first quarter, Palantir reported that its sales jumped 49% year-on-year, reaching $ 341 million. Its free cash flow, excluding certain items, jumped $ 441 million year-on-year to $ 151 million.

Palantir posted a net loss per share of 7 cents in the first quarter, but its earnings per share, excluding certain items, was 4 cents. Analysts on average expect the company’s EPS to be 21 cents next year, so PLTR stock has a very expensive futures price-to-earnings ratio of 116.6 times.

Only 5.1% of shares are being short-sold, so investors should not expect PLTR shares to benefit from a short-squeeze. Fortunately, however, the stock is a favorite with retail investors.

Palantir has promising software solutions and believes it is well positioned to use machine learning and artificial intelligence to improve its offerings. As the company’s technology improves, its predictive capabilities will also increase.

Risks

Palantir does not have products that are easy to understand for its customers. In addition, Palantir must not only continue to reward its talented staff with stock-based compensation, but it must also constantly hire new employees. This is because the company needs more support and engineering staff to help its customers implement its products. As a result, Palantir’s results are expected to continue to come under pressure.

To buy and profit from PLTR shares, investors must hold them for at least five years. The stock can fluctuate in increments of $ 5 to $ 10, providing traders with easy profits. But investors who hold the stocks should expect their losses to increase in the short term. Current Palantir customers could make new deals with the company, while it will likely continue to add more, increasing its revenue in the long run.

The fair value of Palantir shares

Analysts rate the PLTR stock as a “sell” and the fair value calculated by the model I used is $ 17.05, below the current stock price. This last point indicates that stocks could go down.

Stockrover data

Palantir also scores poorly in terms of evaluation. Despite these issues, the company could announce a multi-billion dollar deal in the future, sending the title to new heights.

The bottom line

Palantir is an expensive software store. But its valuations shouldn’t worry growth investors who are willing to hold stocks for a few years. Over the years, Palantir will prove itself, allowing the PLTR share to grow steadily and reward patient shareholders.

The post office Why Palantir shares are popular with some investors appeared first on Investor place.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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