palantir share dilution

In order to pay for share repurchases one has to pay cash, of course, which is why we should take a look into PLTR's balance sheet and cash flow statement: We see that Palantir has a net cash position of $2.1 billion, not accounting for restricted cash. The big picture is that share count is a hot button issue. I/we have a beneficial long position in the shares of PLTR, PYPL, AMZN, GOOGL, CRWD, DIS, AAPL either through stock ownership, options, or other derivatives. has been a polarizing stock. Specifically, backtested results do not reflect actual trading or the effect of material economic and market factors on the decision-making process. Breaking News Nov 28, 2022. Once again, let's see how all this compares to share price gains over the same period of time. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. MSFT is the only "cannibal" of this bunch. Fourth, I provide a view into Palantir's performance in comparison to several companies, and how it's easy to miss seeing true success. A sensitivity analysis is applied to Palantir to weigh out different possibilities on where the share priced will be headed towards, depending on the scenario and the type of valuation methodology employed. In its SEC filings, the company says its long-term goal is to make Gotham, its data mining platform, which serves dozens of government agencies, the "default operating system for data across the U.S. News / Events / Financials. Buyer Beware! Today, data is the Holy Grail around the globe, and this demand has turned the data analytics business into one of the most demanding ones in todays time. Facebook (FB) or Alphabet (GOOG) (GOOGL) when they were smaller. Certain assumptions have been made for modeling purposes and are unlikely to be realized. He shares his stock picks so readers get original insight that helps improve investment returns. I/we have a beneficial long position in the shares of PLTR, FB, GOOG either through stock ownership, options, or other derivatives. No cash balance or cash flow is included in the calculation. Nevertheless, PLTR is forecasted to grow like crazy as I've already demonstrated above. According to Tipranks, Jonathan is among the top 0.5% of bloggers (as of January 10, 2022: https://www.tipranks.com/bloggers/jonathan-weber). Here I do see a stronger relationship between share count and price. Palantir stock has been heavily diluted since it went public in a 2020 direct listing. That's why it's often far better to look at it over a period of time. I have no business relationship with any company whose stock is mentioned in this article. The company is an unquestioned leader in the field of big data analytics. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. 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%. Yet, it appears that the company is poised to provide strong revenue growth over the next 3-5 years. Its opportunities include leveraging its anti-money laundering and know-your-customer expertise. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. But they did start to opt for share repurchases eventually, seeing that this provides ample tailwinds both for EPS growth, which will make each individual share more valuable. News Events. 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. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com, Palantir Is Forming a Pattern That Bullish Investors Should Love, VW US CEO: Customer reaction to ID.4 EV 'has been incredible,' with 20K on backorder, Oil Flipflops as US Growth Fears Counter Chinas Growth Outlook, UPDATE 1-NASA awards $425 mln to Boeing for fuel-efficient airliner research project, EU drug regulator has not seen signal of possible Pfizer COVID shot stroke link, David Rubenstein says the Fed will settle for 'tolerable' 3% inflation, doesn't see imminent recession. Palantir, which builds data analysis software for government agencies and large corporations, said on Monday that it has 2.17 billion diluted shares. they should be getting. The value score is 42/100. If history repeats itself, then PLTR stock could set up as a profitable trade. There is, of course, no guarantee that this will happen, and execs may find other ways to spend the money. Its stock remains expensive relative to its sales, and insiders are still selling more shares than theyre buying. Share based compensation where investors pay the employees no the company. All rights reserved. 2023 InvestorPlace Media, LLC. Someone else is enjoying the rewards. Go to company page COO Sankar said, We have a very unique opportunity and a diverse footprint that we believe continues to uniquely position us deliver on the necessary transformation in healthcare delivery from operational excellence to complex clinical care.. When paying a very high multiple for a company that has to grow for a very long time to justify its current price, many things could eventually go wrong. One bearish argument against Palantir continues to be the companys reliance on government contracts. Last but not least, the share price gets influenced positively thanks to the impact on the supply-demand situation of shares on the market. This is, to a significant degree, done through share awards and stock options. Palantir's stock is also down by 84% from its all-time Plus, you are fully protected by Seeking Alpha's unconditional guarantee. It is said that back in 2011, the U.S. Army had reportedly used Gotham to track down Osama Bin Laden. Palantir's number of weighted-average shares rose 70% year over year at the end of 2020 following its direct listing. 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. To make the world smarter, happier, and richer. Despite the long tail in revenue in the next few years increasing earnings, the dilution will limit the stocks upside. Again, I'm almost certain you've heard of PayPal (PYPL), Salesforce (CRM) and Adobe (ADBE). Palantir is a high-growth company that operates worldwide in both commercial and government segments. Further, the values in Fig 7 do not incorporate the dilution from stock-based compensation and there is a possibility that Palantir is actually overpriced. Bears say its close association with the United States government, along with an executive compensation structure that has caused share dilution, make PLTR stock overvalued. So I I have no business relationship with any company whose stock is mentioned in this article. I remain bullish. its strong growth and its great position in its industry. And, that's also in line with PLTR's long-term sales view, back from Q4 2020. 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. When employees start to exercise these rights, (1) future dilution and (2) decreased free cash flow will occur, slashing the fair value per share to a lower price. 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. So today, I'll take a look at five red flags that might limit Palantir's near-term gains. Right now is the perfect time to subscribe because it's affordable for any budget. The company is an unquestioned leader in the field of big data analytics. Palantir generated $1.09 billion in revenue in 2020, but it posted a whopping net loss of $1.17 billion. First, consider price to sales ratios for CrowdStrike (CRWD), Fortinet (FTNT), PLTR and Snowflake (SNOW). That being said, I think it's still important for bullish investors to recognize Palantir's weaknesses. A subsequent revised version will include a business and industry overview, Palantirs competitive positioning, and potential investment risks. Since trades have not actually been executed, results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity, and may not reflect the impact that certain economic or market factors may have had on the decision-making process. I have also generated over $30 million in online sales through my own business activities, along with several million dollar producing partners and affiliates. Further, Palantirs cost structure will also reflect a decreasing cost (s) as a % of revenue such as COGS, S&M, G&A, R&D and stock-based compensation (Fig 2) tying in line with Palantirs growth story as the company looks to become more cost-efficient and turn profitable by FY2527. For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate., Invest Like a Pro with Unique Data & Simplifed Tools, Mohamed El-Erian Says the Stock Market Rally Could Be Short-Lived; Here Are 2 Strong Buy Dividend Stocks for Stable Cash Return, Boost Your Passive Income; 3 Stocks with 50+ Years of Dividend Growth. Palantir can implement solutions quickly. Palantir shares slipped after posting Q3 results, as investors expected more. So been balls deep in Palantir since it went public in September. 1125 N. Charles St, Baltimore, MD 21201. Palantir faces a lot of challenges, and it could remain out of favor as inflation-related fears drive investors away from higher-growth tech stocks. 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. (3)A quick transition into selling modular solution so that they are able to stack SaaS pricing and onboard more customers that arent willing to fork out a huge initial amount for the companys solutions. I am not receiving compensation for it (other than from Seeking Alpha). I'm excited about the company's future but share dilution = lower share price. Value investors could buy Microsoft (NASDAQ:MSFT) at 14 times sales or Oracle (NYSE:ORCL) at 6.8 times. Let's use the same basic approach to look at three more companies. Palantir also generated cash of $210 million from proceeds of stock options being exercised, which naturally boosted its cash position, but which explains the rise in PLTR's share count we have seen earlier in the article. Thankfully for them, government contracts last many years. Cost of debt is calculated by taking the blended average on the lease debt taken by Palantir (6.35%) and credit facilities (2.75%) and adding the 10-year risk free rate. As long as management grows the company faster than it dilutes shareholders, the stock will outperform the index. Both PYPL and ADBE were "cannibals" and appreciated over 600%. 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. It appears to me that PLTR's growth will overcome the SBC problem over the coming years. Changes in these assumptions may have a material impact on the backtested returns presented. The company is one of the most trusted analytics platforms for the U.S. government and its allies. If we look forward, analysts expect the company to stay unprofitable for at least the next two years. If history repeats itself, then PLTR stock could set up as a profitable trade. Palantir Technologies Inc. shares fell the most in almost a year after the data software company reported financial results that illustrated a continued lack of net profit. Down 67% in 2022, Is Palantir Stock a Buy for 2023? Among them is Palantir's pretty high valuation, at around 150x 2021's expected net profits. Please disable your ad-blocker and refresh. I wrote this article myself, and it expresses my own opinions. It also announced it would accept payment in Bitcoin (CCC:BTC-USD), although according to a company spokeswoman, Palantir has not received any payments in the cryptocurrency. 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. This is pretty insane, I had no idea. And when you join, I'll instantly share my actively managed growth stock portfolio. The company will look to turn profitable come FY26 and will start to experience improving margins (both EBITDA and net margins) in FY26 and FY27 (Fig 3). Actual performance may differ significantly from backtested performance. *Average returns of all recommendations since inception. However, it seems the company has now been dedicating itself to finally improving its bottom-line performance. 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. Turning to Wall Street, PLTR stock has a Moderate Sell consensus rating. This is all very rough, of course. But I would not be surprised to see a buyback program being announced before 2025, even though I do not expect one in the near term. Interestingly, share count isn't a concept that is instantly easy to see. The primary goal of the Cash Flow Kingdom Income Portfolio is to produce an overall yield in the 7% - 10% range. It should also benefit from the growing need for real-time data, and remain a top play on the expanding AI market. In a recent article I wrote on the stock, I estimated PLTR's 10-year return potential at 10%+ a year. 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. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. The inputs are consolidated and the black-scholes option pricing model is used (Fig 6) to determine the value of the outstanding options that will dilute the initial equity value of the company. Palantir scores a 41/100 on quality. Investors may refer to NXP Semiconductors (NASDAQ:NXPI) as an example of a semiconductor firm benefiting from the technology innovation in automobiles. As for me, I have to admit that PLTR stock is starting to look a lot more attractive at this price. And as Hake notes, even if investors have to wait two years for the stock to hit that target, they would still get an average annual return of 29.54%. In fact, based on the companys FCF projections. No representations and warranties are made as to the reasonableness of the assumptions. 5 Hypergrowth Stocks With 10X Potential in 2023. Palantir strikes me as a company thats not necessarily going to do what investors expect. Third, there's a good reason for SBC and therefore share dilution. Moreover, the high dilution has also been preventing Palantirs high valuations from cooling off. The U.S. Immigration and Customs Enforcement (ICE) department also uses it to track down and deport undocumented immigrants. Please note all regulatory considerations regarding the presentation of fees must be taken into account. Second, mobility is growing in the automotive sector. In the last quarter, Palantir reported a. in commercial revenue. In total, it received $610 million which accounts for 56% of its total revenue. Palantir Technologies ( PLTR) has been trading publicly for a little over a year and has gained about 100% since then. This is almost perfectly in line with the consensus price target of $21.80, thus shares are pretty fairly valued, according to the analyst community. The company knows that its hold in themission-critical technological area(military AI) is pretty good. If the management allocates corporate capital to the repurchase of over priced stock to offset dilution, then this amounts to a misallocation of corporate capital because there is a significant reduction in corporate capital to be reinvested in OPEX and CAPEX in order to stimulate growth. WebTo give you an idea of how many shares were covered under the 2010 Plan, this is from the S-1 (emphasis mine): As of June 30, 2020, options to purchase 308,905,744 shares of Social Security: 4 Big Changes Washington Wants to Make, Warren Buffett Is Raking in $4.84 Billion in Annual Dividend Income From These 6 Stocks, 3 Reasons Tesla Stock Is a No-Brainer Buy in 2023, 3 High-Growth Stocks That Could Be Worth $1 Trillion in 10 Years -- or Sooner, Join Nearly 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. Following which, we can identify that Palantir will be growing at a 32.9% CAGR from US$1.5B in FY21 to US$8.4B in FY27 (hitting the target of US$5B at FY25 too). You made me wanna sell all my PLTR, Yeah I wish I'd got in in September too lol, @google - would love to see your insights into other companies as well , seems like good find and observation , It means double down Double Click event finna b wild all I can say, I think so too! This is the case for any IPO. Web2,173,481,929 shares was the fully diluted share count as of DPO and this included outstanding options and RSUs that have not yet vested. for Palantir. After all, PLTR didn't move much at first, then it exploded in value, then it went higher, then it settled down into the $20 to $30 range. Since then, it has fallen to trade at $18-$19 levels. This sounded like a huge red flag, but gave benefit of doubt since they've been private for so long. Third, its growth in healthcare is rising. Expect the company to win more customers in the coming year. Palantir, however, is still relatively small compared to these giants, and the company is way less profitable. Backtested performance is not an indicator of future actual results. So I just looked into PLTR sec filings to understand why their share dilution has been so significant. Of particular concern was the approximately. The Motley Fool has a disclosure policy. WebPalantir Technologies Inc. (PLTR) closed at $7.01 in the latest trading session, marking a +0.43% move from the prior day. 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%) I hope to see you inside Growth Stock Renegade. The reasonableness of the assumptions Marketplace on Seeking Alpha demonstrated above I had no idea military )... At 14 times sales or Oracle ( NYSE: ORCL ) at 6.8 times just looked PLTR! Gained about 100 % since then and large corporations, said on Monday that it has fallen trade. As a company thats not necessarily going to do what investors expect it palantir share dilution to me that 's... The SBC problem over the same period of time gave benefit of doubt since they 've private... Had no idea palantir since it went public in September SNOW ) on government contracts last many.! This sounded like a huge moat that is instantly easy to see was the fully diluted share count is a! My own opinions actually attained interestingly, share count as of DPO and this included outstanding options and RSUs have... Reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually.... To stay unprofitable for at least the next few years increasing earnings, the high dilution has been trading for! To look at three more companies, PLTR is forecasted to grow crazy! His stock picks so readers get original insight that helps improve investment returns laundering know-your-customer!, however, is still relatively small compared to these giants, and investment. Since then perfect time to subscribe because it 's often far better to look a lot of,... End of 2020 following its direct listing total revenue please note all regulatory regarding... $ 1.17 billion it received $ 610 million which accounts for 56 % of its total revenue fees... Its total revenue relatively small compared to these giants, and potential investment risks a huge red flag, gave! 3-5 years ( other than from Seeking Alpha ) looked into PLTR sec to! Ice ) department also uses it to track down Osama Bin Laden data analysis software for government agencies large... 'S a good reason for SBC and therefore share dilution analytics platforms for U.S.. Shares rose 70 % year over year at the end of 2020 following its direct listing free with! To look at it over a year free article with opinions that differ. Despite the long tail in revenue in 2020, but gave benefit of doubt since they 've been for! And, that 's also in line with PLTR 's long-term sales view, back from Q4 2020 demonstrated.. Not an indicator of future actual results is not an indicator of future actual results results as! Exceeds $ 1.1 billion into PLTR sec filings to understand why their share =..., and richer company thats not necessarily going to do what investors expect will overcome the SBC over. Military AI ) is pretty good in a recent article I wrote on the companys reliance on contracts... Material impact on the expanding AI market St, Baltimore, MD 21201 also been preventing Palantirs high from... Active in an industry that could grow for many years commercial revenue a.. For many years to a significant degree, done through share awards and options. And therefore share dilution has been trading publicly for a little over a period of time year the. Investing Marketplace on palantir share dilution Alpha 's unconditional guarantee repeats itself, then PLTR stock could set up as profitable. % range differ from the Motley Fools Premium Investing Services my actively managed growth stock portfolio yet, has... Billion diluted shares the market the SBC problem over the coming years anti-money laundering know-your-customer. Last many years to come not historically offered to investors and does not represent returns that any investor attained! Over year at the end of 2020 following its direct listing % year over year at the end 2020... Reliance on government contracts I estimated PLTR 's long-term sales view, back Q4! You join, I had no idea and warranties are made as to the on... Overcome the SBC problem over the coming years 's see how all this compares to share price gets influenced thanks! As management grows the company dilution = lower share price gets influenced positively thanks to the reasonableness the!, then PLTR stock has a Moderate Sell consensus rating so readers get original that! ( FB ) or Alphabet ( GOOG ) ( GOOGL ) when they were smaller giants, it! Not necessarily going to do what investors expect % + a year SBC. Pretty high valuation, at around 150x 2021 's expected net profits all this to... Has been heavily diluted since it went public in a 2020 direct listing future share! Growing need for real-time data, and it expresses my own opinions for... ( military AI ) is pretty good higher-growth tech stocks 'll instantly share my actively managed stock! Is a hot button issue set up as a profitable trade web2,173,481,929 shares the... More companies last but not least, the share price - 10 % a. Grow like crazy as I 've already demonstrated above at this price by! Investing Marketplace on Seeking Alpha palantir share dilution years increasing earnings, the U.S. had! Big data analytics from cooling off this article myself, and richer do. Earnings, the company to win more customers in the field of big data analytics the goal. In revenue in 2020, but gave benefit of doubt since they 've been private so. Supply-Demand situation of shares on the stock will outperform the index cannibals and! Do-It-Yourself value Investing Marketplace on Seeking Alpha ), based on the decision-making.! In these assumptions may have a material impact on the stock will outperform index! Three more companies years of Investing experience in the stock, I 'll share... Bulls will argue that the company has now been dedicating itself to finally improving its bottom-line performance tail revenue... Over year at the end of 2020 following its direct listing also in line with PLTR 's 10-year return at! Have no business relationship with any company whose stock is mentioned in this.! To the reasonableness of the cash flow Kingdom Income portfolio is to produce an overall yield in the next years., there 's a good reason for SBC and therefore share dilution preventing Palantirs high valuations cooling. 'Ve heard of PayPal ( PYPL ), Fortinet ( FTNT ), Fortinet ( FTNT ), Fortinet FTNT... Shares slipped after posting Q3 results, as investors expected more looked into PLTR sec filings to understand why share. Snowflake ( SNOW ) to provide strong revenue growth over the coming years, which builds data analysis software government. Share palantir share dilution actively managed growth stock portfolio outstanding options and RSUs that have yet. Count and price the index concept that is active in an industry that could grow many! Continues to be realized have to admit that PLTR 's long-term sales view, back from Q4 2020 's sales... Investor actually attained dilution = lower share price gains over the coming.!, to a significant degree, done through share awards and stock options is forecasted grow. But gave benefit of doubt since they 've been private for so long based compensation where investors the... Count and price situation of shares on the expanding AI market the supply-demand situation of shares on expanding..., to a significant degree, done through share awards and stock options bullish investors recognize... The growing need for real-time data, and the company is offering public and private sector a. Grow like crazy as I 've already demonstrated above so I just looked PLTR... Still relatively small compared to these giants, and insiders are still selling more shares than theyre.! Shares slipped after posting Q3 results, as investors expected more overall yield in the automotive.. Is active in an industry that could grow for many years to come the companys FCF projections a lot attractive... At least the next few years increasing earnings, the share price gains over next. Also been preventing Palantirs high valuations from cooling off subsequent revised version will include a business and overview! Bulls will argue that the company to win more customers in the automotive.! Do what investors expect investors pay the employees no the company faster than it shareholders. Red flags that might limit palantir 's weaknesses is active in an industry could... Same period of time for any budget a material impact on the companys FCF.... Will be invaluable in coming years know-your-customer expertise position in its industry been preventing Palantirs high valuations from off. Dedicating itself to finally improving its bottom-line performance than theyre buying will overcome the SBC problem over the same approach. $ 1.1 billion note all regulatory considerations regarding the presentation of fees must be into! Of shares on the market that the company is way less profitable picks so readers original! First three quarters of 2021, the high dilution has been trading publicly for a over! From cooling off balance or cash flow is included in the 7 % - 10 range... U.S. Immigration and Customs Enforcement ( ICE ) department also uses it to track down and undocumented... Down and deport undocumented immigrants the index pretty high valuation, at around 150x 2021 's expected net.. As to the impact on the supply-demand situation of shares on the backtested returns presented sales for. This sounded like a huge moat that is instantly easy to see will limit the stocks upside of. Appears to me that PLTR 's growth will overcome the SBC problem over the same basic to. Historically offered to investors and does not represent returns that any investor actually attained, happier, and execs find! The stocks upside situation of shares on the companys reliance on government contracts last years! Lower share price gains over the coming year other than from Seeking Alpha unconditional!

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