The Palantir Opportunity

Palantir sells software solutions aimed at solving the issues of data integration without requiring organizations to start from scratch, and provides a centralized view to gain insight from the data through artificial intelligence supporting manual operations.

Palantir may be the best positioned organization to profit and grow with the expansion of big government. Its stock recently began trading publicly allowing anyone with about $10 to buy a share.

Sounds cheap. It’s not.

The company has 1.6 billion shares outstanding putting the market capitalization at more than $15 billion on $900 million in annual sales.

The company has about $1.5 billion in new cash, so ex-cash the stock is trading at about 15x sales, which will grow substantially in the next decade. Will the value of the company grow as well? That’s the question.

If the average technology company trades at 10x sales and if Palantir is just getting started in the growth phase, where it could easily see $5 to $10 billion in annual revenue in the next 10 to 20 years (or sooner) then the stock is grossly undervalued. $10 billion in sales with interest rates where they are in 10 years, could mean it is a $100 billion company, which would easily outperform the S&P 500.

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Notes from the journey through existence. 20+ years analyzing and forecasting complex assets at the highest level of the economy.

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Jonathan Poland

Jonathan Poland

Notes from the journey through existence. 20+ years analyzing and forecasting complex assets at the highest level of the economy.

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