Tons of Questions re Palantir $PLTR - my thoughts (Patreon)
Published:
2023-06-04 22:01:44
Imported:
2023-06
Content
Palantir was a data analytics company but now labeled an AI company and as such has been on a tear in recent weeks, doubling in price since March 8.
However, there are some reasons for me to be cautious about the stock.
- First, CEO Alex Karp is a controversial figure. He has been criticized for his ties to the intelligence community and for his libertarian views (neither bothers me but just sentiment).
- Second, while Palantir's AI technology is impressive, it is still in its early stages of development. It is not clear how the company will be able to monetize its technology in the long run.
- Third, Palantir's valuation is very high based on my discounted cash flow analysis. This is a significant premium to the valuation of other software companies.
- Fourth, Palantir's business model is heavily reliant on government contracts. This could make the company vulnerable to changes in government spending.
- Fifth, Palantir's growth is not as explosive as some other growth stocks. The company's revenue growth is expected to slow to the mid-teens in the coming years. Earnings have grown 12.3% per year over the past 5 years
- Sixth, Analyst Ratings have a 1 year target of $8 on the stock - and it is trading nearly double that.
- Institutions own only 30% of the stock - very low.
The IADSS Chart did trigger a buy right before the rampage so I regret I missed that but it was not a stock on my daily watch list.
Net net I think there are cleaner shirts in the laundry.