Palantir: Retail Is Riding On Hopium

Summary
  • Palantir’s stock price has surged over 250% in the last 12 months, but financial metrics don’t justify the current $85 valuation.
  • Despite strong revenue growth and positive net income, Palantir’s valuation metrics are significantly stretched, trading at over 300x 2024 P/E.
  • Share-based compensation continues to dilute shareholders, and a more robust capital allocation framework is needed for buybacks and venture investments going into the latter half of the decade.
  • I recommend a sell rating with a $60 price target, anticipating a 30% decline to align with more reasonable valuation metrics.

The last time I wrote about Palantir (NASDAQ:PLTR), the stock had just crossed over $2.3bn in trailing twelve month revenue and the company had just posted its first full year of positive GAAP net income. Since that time, Palantir has joined. Matt is an individual investor that has been in the equity markets for over a decade. His ultimate investing goal is to build a personal brand and stand-alone family office that provides flexibility on when and how he works going forward. Over the years his investing strategy has matured but he has now landed on a dual investing strategy. Focus on long term capital appreciation with index funds (like the S&P500) with a sprinkle of smaller speculative small cap stocks that may lead to outsized returns. Matt supplements his returns through writing far out of the money covered calls. Matt is a petroleum engineer by education and has worked in the energy industry for a decade. In his free time he enjoys discussing investment opportunities, medium-full bodied cigars and single malt scotches. Matt wants to write articles for Seeking Alpha to deepen his knowledge and due diligence on his speculative stock investments, as well as learn from other authors on SA as he recognizes portfolio strategies change as the investor ages.

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