Palantir Technologies is a data analytics company that initiated its success through government contracts from United States Intelligence Community (USIC) agencies.
The company has since expanded into commercial sector, which has recently shown a greater growth than the government segment.
Palantir hasn’t reported any GAAP net profit to date, but the fundamental financial strength and future growth prospects are solid.
PLTR is a bullish stock that shows signs of high yield and returns in the mid to long term.
Laurence Dutton/E+ via Getty Images Thesis
Palantir Technologies (NYSE: PLTR ) is a data analytics company that initially catered to only government agencies but later expanded into commercial markets and now serves over 200 clients internationally. The company has never reported a GAAP profit but the underlying financial strength remains strong and intimates a prosperous foreseeable future for the company. Most of the costs that currently make PLTR a loss-maker are future-oriented investment-related expenses. Despite showing improving figures for Q3 of 2021, the company’s stock declined 2%, likely in response to the high value of stock-based compensation expenses in the income statement. The stock is currently traded at $21 per share and has a market cap of over $42 billion.
Palantir’s stock may seem volatile at first glance due to its non-profitability, but the company’s infrastructure and strategic investments exhibit very prominent and promising positive attributes for long-term returns. On top of that, while the income statement is short of investors’ expectations, their balance sheet is exceptional. Company Overview
PLTR develops and deploys machine-assisted interactive data integration, management, and security software platforms for large organizations. Their range of products expands into anti-money laundering tech, cryptocurrencies, defense, energy, financial management, retail, and many other industries.
The company essentially operates through two segments: The Government Segment, Palantir “Gotham” , developed to assist agencies like U.S. Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC), and National Institutes of Health (NIH), U.S. Department of Defense (DOD) etc. in data analytics, defense operations & mission planning.
The Commercial Segment has the following 2 platforms to interact with high-volume information by creating a central operating system for their data: Palantir “Metropolis” was developed for hedge funds, banks, and financial services institutions.
Palantir “Foundry” was developed for large corporate clients like Airbus, Fiat Chrysler Automobiles, Morgan Stanley, etc.
These platforms are powered by the “Apollo” software that acts like a layer between the underlying infrastructure of the core data and Palantir’s applications which let the data be easily monitored, analyzed, and manipulated. Palantir’s Future
PLTR’s earnings guidance for the final quarter of 2021 estimates a revenue of $418 million. This is in line with their current growth measures and the increase in their customer base which increased by over 36% in Q3. This means that the company aims to achieve total revenue of $1.5 billion for the year 2021, as the company already has generated $1.1 billion in 9 months till September 2021, indicating a 30% increase from the same period last year, which PLTR also expects to stand for the next 4 years till 2025.
The company’s CFO, Dave Glazer, stated , “We remain focused on expansion. And so, pivoting to expansion, we have more pilots today than at any time in our history… We’re scaling our investments in R&D, hiring devs, investing in new product offerings, value for crypto, the Meta-Constellation, and the commercialization of Apollo.”
Until recently, Palantir’s most lucrative contracts came from the government. However, the quarter 3 results showed that the commercial segment experienced higher revenue growth (37%) compared to the government sector (34%). This is a promising lead for the company’s future growth prospects as they venture into catering towards a vastly diverse field of potential customers. Their focus on expanding into the commercial sector is further evidenced by their increase of marketing expenses by over 144%. Their investments
Palantir is not only a data analytics fund but is exhibiting investment strategies similar to those used by big tech. They are making substantial investments in small but promising tech companies.
According to the Guardian Fund , an investment management fund, “Palantir is becoming one of the more important global software companies… In addition, Palantir has quietly become a significant investor, investing well over USD 200 million in eight companies. Thereby, it is following the lead of companies like Tencent, Alphabet, and Shopify of establishing valuable investment portfolios.”
According to Fortune , “Among the investments are robotics company Sarcos; biotechnology company Celularity; and biopharmaceutical company Roivant Sciences. Each offers a chance […]