Palantir (PLTR) is a beloved stock among retail investors. No wonder since it is up 181% over the last 12 months. Part of the allure is the obscurity of what exactly PLTR does. On their earnings press releases under the “About Palantir” section, they write: “Foundational software of tomorrow. Delivered today.” That’s cool but what does it mean? As far as I can tell, PLTR provides data analytics software for the government intelligence community as well as corporations.
In addition to the obscurity of their business, another concern I have is the valuation. PLTR has a market cap of $101 billion as of the close on Friday November 1, 2024. Meanwhile, they are guiding 2024 revenue to $2.742-$2.750 billion. In other words, the stock is trading at 37x current year revenue. I remember when 10x revenue was considered insane. Adjusted EBITDA is likely to come in around $1 billion in 2024. So PLTR is trading at 101x that metric. Of course, they are barely profitable at the bottom line with Adjusted EPS of 17 cents through the first half of 2024.
PLTR reports 3Q24 earnings Monday November 4 after the market close.
Disclosure: Top Gun is short shares of PLTR.
