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Summary
- Palantir’s stock is driven by unrealistic expectations rather than fundamentals, despite impressive growth in AI-driven government and commercial segments.
- Indeed, the company’s Q3 performance was strong, with a 30% YoY revenue increase and an 8th consecutive quarter of margin growth.
- Despite robust financials and AI advancements, excessive share dilution and insider selling raise concerns about long-term sustainability.
- The last time I looked at PLTR in early September this year, the stock was trading at 86.7x forwarding P/E. Now, it’s trading at 177.2x – 104% higher.
- I maintain my “Hold” rating on Palantir this time as I believe that the current overvaluation might not end well for today’s buyers in 2-3 years.
- I am Danil Sereda, chief investment officer at a family office. I analyze information that ordinary retail investors do not have access to, and lead the investing group Beyond the Wall Investing.
Intro & Thesis
I’ve been covering Palantir Technologies Inc. (NASDAQ:PLTR) here on Seeking Alpha since October 2021, initially rating the stock as a “Sell” due to its overvaluation and seemingly limited growth at the time. My bearish calls were successful for about a year – until market expectations shifted towards rapid growth through artificial intelligence, allowing PLTR stock to recover quickly. Due to the persistent overvaluation, I couldn’t upgrade PLTR to “Buy,” although the positive impact of the then-new AIP boot camp program seemed quite obvious. So I upgraded the stock to “Hold” in February 2023 and have written about the company once a quarter since then, coming to mostly neutral conclusions.
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