Should you buy Palantir stock? Feb 2023
- 5 months ago
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What most people don’t know is that Palantir is actually older than Facebook as it was founded back in 2003. But the company has been public for less than 3 years and its share price has been quite volatile.
Right now the company has a market cap of $19.1 billion. It’s got $2.6 billion in cash and no debt which translates to an enterprise value of roughly $16.5 billion.
Revenue over the last 12 months is 1.9 billion, free cash flow is 184 million and net income is negative 371 million. That means the company is valued at 8.7 times revenue or 90 times free cash flow.
Although the company has negative 12 month net income, it did post its first profitable quarter in Q4 and this led to a 20% rally in the stock. However, that gain has reversed over the last few days.
One reason Palantir has been able to operate at a loss for so long is share based compensation. During 2022, it amounted to $565m, which was 30% of annual revenue. And between December 2020 to December 2022, shares outstanding increased by 14%.
That said, Palantir appears to be moving in the right direction. 2022 revenue was up 24% year over year with growth in both government and commercial segments.
Gross margins have increased from 68% back in 2020 to 79% last year and operating expenses have actually decreased from 1.9 billion in 2020 to below 1.7 billion in 2022. That’s something not many other companies have been able to achieve in this inflationary environment.
Based on their CEO, Alex Karp, Palantir can generate at least $4.5 billion in revenue by 2025, which is more than double last year’s figure.
What most people don’t know is that Palantir is actually older than Facebook as it was founded back in 2003. But the company has been public for less than 3 years and its share price has been quite volatile.
Right now the company has a market cap of $19.1 billion. It’s got $2.6 billion in cash and no debt which translates to an enterprise value of roughly $16.5 billion.
Revenue over the last 12 months is 1.9 billion, free cash flow is 184 million and net income is negative 371 million. That means the company is valued at 8.7 times revenue or 90 times free cash flow.
Although the company has negative 12 month net income, it did post its first profitable quarter in Q4 and this led to a 20% rally in the stock. However, that gain has reversed over the last few days.
One reason Palantir has been able to operate at a loss for so long is share based compensation. During 2022, it amounted to $565m, which was 30% of annual revenue. And between December 2020 to December 2022, shares outstanding increased by 14%.
That said, Palantir appears to be moving in the right direction. 2022 revenue was up 24% year over year with growth in both government and commercial segments.
Gross margins have increased from 68% back in 2020 to 79% last year and operating expenses have actually decreased from 1.9 billion in 2020 to below 1.7 billion in 2022. That’s something not many other companies have been able to achieve in this inflationary environment.
Based on their CEO, Alex Karp, Palantir can generate at least $4.5 billion in revenue by 2025, which is more than double last year’s figure.