2024-07-26 10:54:01 ET
Summary
- Palantir Technologies Inc.'s heavy reliance on government contract used to concern me.
- However, government contracts (especially from DoD), once past a pivotal point, provide recurring revenue and growth opportunities.
- Judging by the recent developments, I believe Palantir has already reached this point.
- Additionally, potential S&P 500 Index inclusion could create more demand for the shares and reduce price volatility.
PLTR stock taught me a lesson
I last wrote on Palantir Technologies Inc. ( PLTR ) about 3 months ago. Given the rapid development of its business, it would be helpful for me to start with a brief recap of the background. At that time, the company had just reported its 2024 Q1 results. The results were mixed and triggered a sizable price correction of more than 10% after the press release. Under this context, I wrote an article, entitled Give The Knife More Time To Fall , as illustrated by the screenshot below, to argue for a hold thesis. The article argued that:
In the longer term, I expect the company’s defense products to perform well given the differentiating features. However, in the near term, I see more downside pressure than upside potential and I rate the stock as HOLD. To reiterate, the first concern on my mind is its small profit due to cost pressure. Second, I'm not optimistic that the stock can overcome the ~$26 resistance level anytime soon judging by the recent insider activities and technical trading patterns.
Read the full article on Seeking Alpha
For further details see:
Palantir Stock: I Misjudged The DoD Catalyst, Badly