It’s a general feeling that Palantir is the future of data-driven technology. However, apart from limited bouts of retail hype, Palantir still has a lot to prove. The company is going the right way about securing the necessary pathways to commercial success after a long period of limited government contracts, but after the company’s most recent Q4 earnings, it appears that investors are now picky regarding the maintenance of the company’s government arm; desiring strong levels of growth in both sectors.
The real utility of Palantir moving forward is without a doubt its commercial sector, but the company is yet to establish a firm grip on the growing market.
Looking to analyst opinion, Keith Weiss from Morgan Stanley points out the company’s well-positioned government business and also the “potential” for its commercial unit to swoop in on further sales, re-affirming Palantir’s commercially focused outlook. Financially, Palantir sits in its own category compared to the majority of its competition; trading at a stark discount on a growth-adjusted basis – despite “high growth and significant cash flow generation”.
Although looking attractive on a risk/reward basis, we shouldn’t roll out the red carpet just yet. Palantir has a lot to prove to investors; in the last earnings report, PLTR beat on revenue but still failed to hit EPS targets. Trading at an alluring discount, PLTR stock will likely remain depressed until we see an earnings report that highlights growing commercial legitimacy and clear maintenance of government contracts, all while ensuring solid cash flow and an aggressive future-thinking growth strategy.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.