PLTR - Palantir: I Am More Optimistic (Ratings Upgrade)
2024-06-17 12:28:11 ET
Summary
- My initial valuation of Palantir was too pessimistic, overlooking the higher likelihood of growth the AIP bootcamps have made clear.
- I am more convinced they possess a moat, being a technological disruptor and enjoying hard-to-replace trust with governments.
- The biggest issue is what happens with share dilution and buybacks, and too much stock-based compensation could undermine FCF per share.
In my initial thesis on Palantir Technologies Inc. ( PLTR ), I expressed concern about the potential for a long-term correction in the stock price or poor returns, such that it might be better to put one's money elsewhere. I concluded:
Palantir: I Am More Optimistic (Ratings Upgrade)My case is that when we allow for perfectly plausible downsides to be reflected in the valuation, we see that PLTR is at best fairly valued and at worst very overvalued. Investors make money by allowing a margin of safety and the possibility for less optimal outcomes in their entry price. That is not what Mr. Market offers today.