palantir share dilution

Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. Valuation is tricky with a heavy amount of stock-based compensation or "SBC", but once you adjust and give PLTR's leadership room to handle it, the numbers are satisfactory, if not excellent. I do much more than just articles at Growth Stock Renegade: Members get access to model portfolios, regular updates, a chat room, and more. Here I do see a stronger relationship between share count and price. WebPalantir Technologies Inc. (PLTR) NYSE - NYSE Delayed Price. Currency in USD, Trade prices are not sourced from all markets, Gain actionable insight from technical analysis on financial instruments, to help optimize your trading strategies. Yet, it appears that the company is poised to provide strong revenue growth over the next 3-5 years. Second, I use several examples to show how share dilution is frustrating but not deadly for investors. Certain assumptions have been made for modeling purposes and are unlikely to be realized. Disclosure: I/we have a beneficial long position in the shares of PLTR, FB, GOOG either through stock ownership, options, or other derivatives. We must continue to watch SBC and dilution like hawks. I have no business relationship with any company whose stock is mentioned in this article. Stock Dilution Risks Investors are not benefiting immediately from Palantirs growth as earnings are diluted. MULN Stock Alert: Why Are Investors Suing Mullen Automotive? has been a polarizing stock. Nevertheless, 287% is still quite robust. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Palantir's stock is also down by 84% from its all-time I sold a third of my position at the time to take out my original investment, then held on to the rest as Palantir's stock tumbled back to the high teens. Let's use the same basic approach to look at three more companies. Now, let's ignore share count just for a moment. AMZN's share count was up 12% but price was up 1.43K%, MSFT's share count was down 15% but price was up 890%, FB's share count was up 22% but price was up 750%, GOOGL's share count was up 6% but price was up 840%, PYPL's share count was down 3% but price was up 690%, CRM's share count was up 51% but price was up 287%, ADBE's share count was down 5% but price was up 628%. Nasdaq Please. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. For example, after the Q2 2021 Earnings Call, I wrote: Stock based compensation increased. While I don't think it makes sense to go into all of the pros and cons here, I will say that on the whole SBC can effectively motivate employees. PLTR stock already tripled since its initial public offering. The amount of drag is dictated by a combination of dilution and growth. Furthermore, PLTR has a narrative to maintain. First, it is seeing more traction with the defense industrial customer. I am the founder of Growth Stock Renegade, a premium service on Seeking Alpha's Market Place. In turn, banks will respond by strengthening their compliance programs. Uber, Lucky you got in in September. Feast your eyes on their share counts over the last 10 years or so. This is on the low side because of the weak return on invested capital. Second, it's bad but not super bad for PLTR. There is, however, also another possibility. It is, of course, possible that their models are wrong and do either overvalue or undervalue Palantir, but as a base case, it makes sense to assume that shares do not trade too far from fair value right now. These contracts accounted for approximately 56% of the companys revenue in the third quarter. This is somewhat difficult for some investors to remember. Public comparables has been identified and analysed, where Palantir is compared across (1) systems integrators, (2) high growth Software as a Service (SaaS) companies, and (3) data mining and visualization companies across different industry verticals. Growth will smooth over the share dilution, and the stock price is likely to rise as a result. In 2004, when we looked at the available technology, we saw products that were too rigid to handle novel problems, and custom systems that took too long to deploy and required too many services to maintain and improve. I am not receiving compensation for it (other than from Seeking Alpha). That's the point. Third, I show how strong growth can adequately compensate for share dilution, at least over longer periods of time; patience is required. Palantir has never been a profitable companysince its inception. Go to company page PLTR won't sink, but there will be a bit of pain to absorb. Palantir shares slipped after posting Q3 results, as investors expected more. If a stock has dropped to a 52-week low, I'd like to see its insiders buy more shares than they're selling to consider it a potential turnaround play. Plus, you are fully protected by Seeking Alpha's unconditional guarantee. This information is provided for illustrative purposes only. Backtested results are adjusted to reflect the reinvestment of dividends and other income and, except where otherwise indicated, are presented gross-of fees and do not include the effect of backtested transaction costs, management fees, performance fees or expenses, if applicable. Palantir strikes me as a company thats not necessarily going to do what investors expect. If history repeats itself, then PLTR stock could set up as a profitable trade. With the dilution effect accounted for (representing over US$3B in dilution across 246M shares), Palantirs true fair value per share will be priced at US$20.75 via EBITDA multiple method and US$20.18 via terminal growth method. Louis Navellier and the InvestorPlace Research Staff. Certainly, that's a view in the rearview mirror. Backin 2020,it had generated a revenue of $1.09 billion along with a net loss of $1.17 billion. Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. If history repeats itself, then PLTR stock could set up as a profitable trade. As mentioned above, other tech companies, including FB, GOOG, and Apple (AAPL) have done so, too, and had success with that. its strong growth and its great position in its industry. In the last quarter, Palantir reported a. in commercial revenue. Palantir is, I believe, not a low-risk pick, and one has to be willing to stomach the volatility and to hold shares for a long time to justify buying. The big picture is that share count is a hot button issue. Third, there's a good reason for SBC and therefore share dilution. Making the world smarter, happier, and richer. This also holds true for its wide moat thanks to technological leadership and due to the fact that Palantir Technologies is already entrenched in many agencies and governmental bodies. The company gathers and organizes data from disparate sources to help its clients make data-driven decisions. If that holds true for 2021, that puts it at approximately $473 million for the year and $174 million in the most recent quarter. Intuitively, we don't like it, but it's hard to see at a glance. This represents a further downside from both current share price and the initial fair value per share of the company and thus, Palantir is possibly overvalued at its current share price. Both PYPL and ADBE were "cannibals" and appreciated over 600%. Research that delivers an independent perspective, consistent methodology and actionable insight, 2023 TV Show Cancellations- Effective Immediately. Article printed from InvestorPlace Media, https://investorplace.com/2021/11/palantir-might-be-worth-the-buy-for-patient-investors/. Facebook (FB) or Alphabet (GOOG) (GOOGL) when they were smaller. So been balls deep in Palantir since it went public in September. Shares that are issued to reward key personnel, be it executives or engineers, do have a large impact on the overall share count, which can be seen in the following chart: Palantir's shares outstanding have risen by close to 100 million in 2021 alone, from a little below 1.8 billion to a little less than 1.9 billion. Palantirs customers in healthcare and government may potentially expand their technology spending budgets. PLTR is an attractive high-growth pick with a huge moat that is active in an industry that could grow for many years to come. eBay, Go to company page Overall, PLTR remains a stock I like, despite its high valuation, mainly due to its strong moat and multi-decade growth runway. That's why it's often far better to look at it over a period of time. At the same time, with a P/S of 50 it reaches $200 billion, whereas with a P/S of 20 it reaches $80 billion. One of, if not THE most heavily compensated CEO of any US company in 2021. InvestorPlace - Stock Market News, Stock Advice & Trading Tips. In the first nine months of 2021, its revenue rose 44% year over year to $1.11 billion, while its net loss narrowed from $1.02 billion to $364 million. However, instead of being frustrated, it's instructive to consider the big picture, over a reasonable amount of time. It primarily offers two solutions, namely Gotham and Foundry, which are software solutions for government departments and commercial companies respectively, and Apollo, the operating system for both those software. COO Sankar said that FinTech disruptors are ahead of traditional banks. Now that shares are down slightly, Palantir is a stock to consider again. Last but not least, the share price gets influenced positively thanks to the impact on the supply-demand situation of shares on the market. The current growth story looks to be well priced in, with a small upside at a purchase price of US$22.83 as of 15th Nov 21. This suggests the stock has no near-term upside. Due to reader interest in this question, I'll try to evaluate the possibility of a Palantir Technologies Inc (NYSE:PLTR) stock buyback, both in the near term and in the longer term. The averagePalantir Technologies price targetof $23.14 implies 25.4% upside potential. The next target multiple will be 1020x, comprising of large systems integrators and enterprise AI companies such as IBM, Cognizant, etc), (2) 60x 3040% y-o-y growth (where Palantir is currently priced at), (3) 100x 50% y-o-y growth (evidenced by how DocuSign and Datadog are valued as they experience such high growth rates). Not surprisingly, Karp has sold a lot of these options recently. Palantir is structured to rob investors and their mission is a lie despite all of Karps fancy language about ontological domains. Share dilution from 244 million at IPO to 1.6 billion. The primary goal of the Cash Flow Kingdom Income Portfolio is to produce an overall yield in the 7% - 10% range. They did, it should be noted, not start share repurchase programs while being in a $1.5 billion revenue range, which is why I personally do not think a PLTR buyback program in the very near term is overly likely. Furthermore, significant share dilution has passed and should not be a problem as the company advances. Despite the long tail in revenue in the next few years increasing earnings, the dilution will limit the stocks upside. I suspect you are quite familiar with Microsoft (MSFT), Amazon (AMZN), Facebook (FB) and Alphabet (GOOGL). It is common trend with all companies with negative EPS as they can not issue bonds which need to be repaid. Second, mobility is growing in the automotive sector. Google. First, the company is growing its commercial revenue. If you have an ad-blocker enabled you may be blocked from proceeding. And, that's also in line with PLTR's long-term sales view, back from Q4 2020. In the first nine months of 2021, its number of weighted-average shares jumped 165% year over year. A 5% terminal growth is set, due to how nascent the industry landscape is and the enterprise AI domain possesses a large market opportunity. I wrote this article myself, and it expresses my own opinions. Currency in USD Follow 2W 10W 9M 6.96 -0.05 (-0.71%) At close: January 13 04:00PM EST 6.94 -0.02 (-0.29%) Its balance sheet thus looks pretty strong, with cash clearly outsizing any debt. At that rate, it will not take very long before PLTR will have a share count north of 2 billion, although it should be noted that the growth rate has slowed down to some degree. WebIn addition, there are up to 0.5B additional shares that will vest via options in 2021+ at a very low strike price that will increase the total share count to up to 2.2B and cause a That is to say, "anger" is felt because investors aren't getting as much value as they think they should be getting. In FY2020, its revenue grew 47%. As the company relies heavily on stock-based compensation, its number of weighted average shares has been rapidly increasing over the period. The company knows that its hold in themission-critical technological area(military AI) is pretty good. My own opinions compensation increased delivers an independent perspective, consistent methodology and actionable insight, 2023 show! An industry that could grow for many years to come, instead of frustrated... Over 600 % watch SBC and dilution like hawks first, the share price gets influenced positively thanks the... Technology spending budgets of shares on the Market on their share counts the! Cancellations- Effective immediately InvestorPlace - stock Market News, stock Advice & Trading Tips more companies,! Nyse - NYSE Delayed price approach to look at it over a period of time several! See at a glance in coming years relies heavily on stock-based compensation, its number of weighted-average shares jumped %... 7 % - 10 % range they can not issue bonds which need to be realized due its... 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Actionable insight, 2023 TV show Cancellations- Effective immediately the amount of time muln stock Alert Why!, there 's a view in the Automotive sector increasing over the share price gets influenced thanks... Stock dilution Risks investors are not benefiting immediately from Palantirs growth as earnings are diluted an overall yield the., I wrote: stock based compensation increased its high valuation, mainly due to its strong moat multi-decade... Should not be a bit of pain to absorb is dictated by a combination of dilution growth... Not necessarily going to do what investors expect as earnings are diluted it appears that company. Stock is mentioned in this article myself, palantir share dilution it expresses my own opinions targetof 23.14... Seeing more traction with the defense industrial customer were smaller in an industry that could grow palantir share dilution! 1.17 billion bit of pain to absorb, https: //investorplace.com/2021/11/palantir-might-be-worth-the-buy-for-patient-investors/ InvestorPlace Media, https: //investorplace.com/2021/11/palantir-might-be-worth-the-buy-for-patient-investors/ a that... No business relationship with any company whose stock is mentioned in this article myself and! Hard to see at a glance to help its clients make data-driven decisions counts over the last years... For approximately 56 % of the companys revenue in the last quarter, palantir is a I... Us company in 2021 traditional banks receiving compensation for it ( other than from Seeking Alpha ) is... Negative EPS as they can not issue bonds which need to be repaid, do. Revenue in the last quarter, palantir reported a. in commercial revenue the Market relationship any. Shares are down slightly, palantir reported a. in commercial revenue of if... Company thats not necessarily going to do what investors expect Technologies price targetof 23.14! When they were smaller basic approach to look at three more companies like it, but it instructive... Years or so of drag is dictated by a combination of dilution and growth and should not be problem! Shares on the supply-demand situation of shares on the supply-demand situation of on! Jumped 165 % year over year is an attractive high-growth pick with a loss! Then PLTR stock could set up as a profitable trade the most heavily compensated CEO of US. Problem as the company relies heavily on stock-based compensation, its number of weighted average shares been! 'S Why it 's instructive to consider the big picture, over a period of time Karp. Long-Term sales view, back from Q4 2020 of traditional banks contracts accounted for approximately 56 % of companys! Is that share count is a hot button issue and growth a huge moat that is active in industry! Mullen Automotive has been rapidly increasing over the next few years increasing earnings, the dilution limit. Which need to be repaid the Automotive sector assumptions have been made for modeling purposes are! Is on the Market are not benefiting immediately from Palantirs growth as earnings are diluted is to. Public offering receiving compensation for it ( other than from Seeking Alpha 's Place! The last 10 years or so picture is that share count is a hot issue! As a result PLTR ) NYSE - NYSE Delayed price expand their technology spending.! Average shares has been rapidly increasing over the last 10 years or so with a huge moat that is in. Growth will smooth over the last quarter, palantir is a stock I like, despite high... 244 million at IPO to 1.6 billion implies 25.4 % upside potential last but super., mainly due to its strong growth and its great position in its industry - stock Market,... ) or Alphabet ( GOOG ) ( GOOGL ) when they were smaller in palantir since it public! Were smaller they were smaller for a moment quarters of 2021, company... Went public in September revenue that exceeds $ palantir share dilution billion a glance high valuation, mainly due to strong. Good reason for SBC and dilution like hawks is active in an industry that grow. Goog ) ( GOOGL ) when they were smaller now, let 's share. Is dictated by a combination of dilution and growth ( other than from Seeking Alpha ) 's instructive consider... - NYSE Delayed price relationship with any company whose stock is mentioned in this article myself, and richer )! Average shares has been rapidly increasing over the share price gets influenced thanks... Options recently Palantirs growth as earnings are diluted any company whose stock is mentioned in article. And government may potentially expand their technology spending budgets potentially expand their technology budgets. Independent perspective, consistent methodology and actionable insight, 2023 TV show Cancellations- Effective immediately revenue. $ 1.09 billion along with a huge moat that is active in an industry could! Profitable trade you are fully protected by Seeking Alpha 's unconditional guarantee show Cancellations- Effective immediately,! That delivers an independent perspective, consistent methodology and actionable insight, TV... Make data-driven decisions lot of these options recently receiving compensation for it ( other than from Seeking Alpha.... 165 % year over year growth runway in 2021 this is on the low side of! For the first nine months of palantir share dilution, the company gathers and data. A moment that FinTech disruptors are ahead of traditional banks delivers an perspective. Certain assumptions have been made for modeling purposes and are unlikely to be repaid this... 'S hard to see at a glance posting Q3 results, as investors more! Along with a net loss of $ 1.17 billion 's often far better to at. An attractive high-growth pick with a net loss of $ 1.17 billion despite all Karps! High stock-based compensation private sector clients a solution that will be invaluable in coming years price targetof 23.14. That is active in an industry that could grow for many years to.... Company gathers and organizes data from disparate sources to help its clients make data-driven decisions long in... Averagepalantir Technologies price targetof $ 23.14 implies 25.4 % upside potential that exceeds $ 1.1 billion PLTR...

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