Palantir Stock Detailed Analysis and Forecast in 2021 and Beyond

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Palantir Technologies Inc. (NYSE: PLTR) develops software solutions for federal government agencies and commercial businesses. Its proprietary Palantir Gotham software is highly coveted in defense and intelligence agencies, owing to its pattern identification from datasets and reports. Palantir Foundry, on the other hand, is a big hit among businesses as it creates a central operating system for data storage, integration, and analysis.

Palantir – Market Reputation 

It is no secret that Palantir Technologies is a US government favorite, given its widespread use in the federal central systems, particularly defense and law enforcement. For this reason, the company has remained secretive about its activities, despite operating as a publicly-traded company. Moreover, the company’s role in immigration enforcement in the country in 2019 under President Donald Trump called for severe criticism of the company, as many labeled Palantir’s proprietary technologies “unethical”. Renowned NGO Amnesty International issued a warning against PLTR in September 2019 stating “Palantir is contributing to serious human rights violations” following its crackdown on immigrants.

In order to improve its reputation among investors, Palantir set up shop in Canada in October 2019, headed by former Canadian ambassador for the United States David MacNaughton. However, the company’s Canadian office seems to be on fire as well, as the Canadian government has launched an official probe into MacNaughton’s role in Palantir, as a conflict of interest with his previous governmental job.

Canada Pension Plan Investment Board (CPPIB), which was the biggest institutional holder of PLTR stocks worth C$244 million, is currently debating whether to hold or sump the shares of the company, following the statement issued by federal democrats. The federal new democrats want CPPIB to close its position in Palantir, after Amnesty International’s report.

Thus, it is well established that Palantir does not sit well with the ethical community at all. This doesn’t mean that the company isn’t worth looking into. It has been dubbed as the world’s most secretive unicorn, with an estimated valuation of $20 billion pre-IPO. Its revenues have crossed the $1 billion mark in 2020, making it one of the most profitable semi-governmental agencies, surpassing the Central Intelligence Agency (CIA) and National Security Agency (NSA).  Interestingly, Palantir has worked with these governmental agencies as a contractor on and off throughout the years. Also, Palantir worked with the Centre for Disease Control (CDC) during the pandemic outbreak to analyze and compute red zones.

Palantir Technologies Direct Listing 

PLTR has not issued any statements despite the multiple reports calling the organization’s technologies “unethical”, and has been a key strategic asset to the United States government. As a unicorn tech company, Palantir made its public debut on September 30, 2020, through a direct listing on the New York Stock Exchange. Owing to its direct IPO listing, the company evaded the initial costs of the IPO, allowing private investors to sell up to 20% of their stake through the exchange. Palantir started trading at $10 per share, giving it an initial valuation of $16.50 billion. The company has a fully diluted outstanding share base of 2.17 billion, comprising 52 million restricted stock units. Palantir has been named seven times in the CNBC Disruptor list.

PLTR has gained 134.2% since its IPO to close Friday’s trading session at $23.98. The stock has gained 1.42% during aftermarket hours and is expected to have an opening price of $24.32 on March 22, 2021.

PLTR Stock: Price Movement 

PLTR made its public debut on September 30, 2020, with an initial trading price of $10. However, the stock declined marginally on the same date to close the trading session at $9.50. PLTR hit its all-time low of $8.90 a few days later on October 6, 2020.

The stock began to pick up the pace since November, as the U.S. election results and vaccine efficacy reports came out. The stock gained 405.62% from its all-time low to hit its all-time high of $45 on January 27, 2021.

However, the $45 mark has formed a resistance level, as the stock is struggling to break-out of this price barrier. The stock has declined 46.71% since hitting its all-time high in January. The stock is currently trading above its 200-day moving average of 22.42, but below its 50-day moving average of $27.90, indicating a sideways drift.

Based on forecasts of seven analysts on Tipranks, PLTR is expected to gain 6.21% soon to hit $25.83. The stock has a high price forecast of $40, and a low forecast of $15. Despite the potential upside, only two of the seven analysts have rated PLTR as a “Buy” stock, while four rated it as a “Sell” stock, and one rated it “Hold”.

Analysts at Goldman Sachs upgraded their view regarding Palantir stock from “Neutral” to “Buy” in February, and the Citigroup team downgraded it from “Neutral” to “Sell” in January.

Palantir Technologies: Financials and Consensus Estimates

PLTR crossed the $1 billion revenue mark in 2020 by generating $1.09 billion in fiscal 2020. The stock’s gross profit stands at $740.13 million, which translates to a gross profit margin of 67.74%. However, the company is yet to generate any bottom-line profits. Its trailing-12-month net income and EPS values are negative $1.17 billion and $1.20 respectively.

While the company’s cash balance at the end of fiscal 2020 of $2.01 billion represents adequate liquidity, the stock is bleeding cash from its operations. Its net operating cash flow balance is negative $296.61 billion. Moreover, PLTR’s trailing-12-month return on equity margin is negative 139.76%.

 According to Yahoo Finance estimates, PLTR’s EPS is expected to decline 20% year-over-year to $0.16 in fiscal 2021, while revenue is expected to increase 35.2% year-over-year to $1.48 billion this year. The consensus estimates for 2022 indicate a 31.2% rise in EPS and a 31.1% rise in revenues.

Conclusion 

PLTR is a disruptive technology and software company and is widely used by federal agencies in the country. While the company’s operations might not be 100% ethical, it generates substantial revenues from them periodically. Palantir Technologies, which drew criticism particularly under the Trump administration, has an opportunity to rebrand its operations under Biden, which should equate to significant price gains. Though PLTR’s financials are expected to improve slightly this year, investors should wait till the company turns profitable before investing.

 

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