First, I look at PLTR’s early growth from $10 to $25 or so today.
Second, I review PLTR’s growth assumptions once again showing how 30% growth per year is probably too modest.
Third, I show how leverage on PLTR using long-dated options probably isn’t going to greatly accelerate investor gains over the next 2-3 years.
Fourth, I explain how many shares are needed right now to reach $1 million in PLTR stock by the end of 2025, given rational growth models.
This idea was discussed in more depth with members of my private investing community, Growth Stock Renegade. Learn More »
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It’s very simple really. What’s growth really mean for Palantir (NYSE: PLTR ) investors in 2022, 2023, 2024 and beyond? This is more difficult to answer than it might appear on the surface but all will be revealed.
Here’s how the article will play out. First, I look at PLTR’s early growth from $10 to $25 or so today. I don’t expect the same year-over-year growth, but PLTR investors today could still do very well.
Second, I review PLTR’s growth assumptions once again showing how 30% growth per year is too probably too modest. I still believe PLTR is sandbagging.
Third, I show how leverage on PLTR using long-dated options probably isn’t going to greatly accelerate investor gains over the next 2-3 years. That’s not to say options are bad, but LEAPS don’t look sexy here.
Lastly, I explain how many shares are needed right now to reach $1 million in PLTR stock by the end of 2025, given rational growth models. This is not “get rich quick” at all, but instead it’s meant to be an intriguing way to frame future growth for any investor.
Past Performance Won’t Get You There
Let’s start with a basic approach. Here’s how PLTR looks thus far: In one year, PLTR has gone up 155% going from $10 on September 30th, 2020 through $25.88 on October 29th, 2021. (I’m seeing $26.47 right now.)
Although I don’t expect similar results going forward, we can roughly estimate how things would look. It’s been about 400 days since PLTR’s DPO. Therefore, very grossly speaking, PLTR is gaining about 0.23% per day compounded. I did that fast, and very back-of-napkin, but it’s still fun and interesting, if not ridiculous. Here’s how things would look now if you bought at the DPO: 10 shares at DPO for $100 = $250
100 shares at DPO for $1,000 = $2,500
1,000 shares at DPO for $10,000 = $25,000
10,000 shares at DPO for $100,000 = $250,000
In other words, even with $100K invested you would not yet be a PLTR millionaire. How many more days at 0.23% would it take to reach $1 million in PLTR stock in this case? Here’s the math: 10 shares at DPO = 4,000 days (about 11 years) 100 shares at DPO = 3,000 days (about 8 years) 1,000 shares at DPO = 2,000 days (about 5.5 years) 10,000 shares at DPO = 1,000 days (about 2.5 years) Of course, this is mostly absurd. Getting 150% returns per year is outlandish and it would have required buying right at the DPO for $10 per share. Plus, you’d need to keep getting 150% per year. Also, it would require zero selling. And, much more. Although this is all fun, it’s unrealistic for most investors.So, the first big point is that even starting with a lot of money and lot of shares, very few investors are hitting $1 million with PLTR right now . And, even with robust assumptions, it’ll take many more years to hit the big goal. Therefore, patience is required. There’s no way around the math. More Reasonable Assumptions For a moment, let’s review one basic ratio. Squinting a bit, you can see that PLTR’s average price-to-sales ratio is about 28. Next, here are several more mature software companies, plus PayPal (NASDAQ: PYPL ), CrowdStrike (NASDAQ: CRWD ) and Snowflake (NYSE: SNOW ) for a bit of fun, and added perspective. Not surprisingly, SNOW still has a much higher P/S ratio than PLTR. That’s been the case for a while. And, CRWD is quite a bit higher. Then, naturally, all the older and bigger software companies I’ve shown here have significantly lower P/S ratios. Maturity acts like gravity, pulling P/S down. However, with PLTR, I could easily see the P/S hold around 28 for the next several years as long as strong growth is maintained. In […]