How to Buy Palantir Technologies (PLTR) Stock

Data science is changing the world around us. It creates incredible insights helping businesses operate faster, leaner and more profitably. It is also helping to solve some of the most pressing issues like COVID-19.

Few companies are leveraging this as well as Palantir Technologies (NYSE: PLTR), one of the most promising growth stories in recent years.

How to Buy PLTR Stock Summary

Are you looking to invest in big data analytics? This guide will show you how to buy stocks, including PLTR.

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PLTR Stock History

Palantir Technologies is a software company that specializes in data analytics. Founded in 2003 by a group of entrepreneurs with the co-founder of PayPal, Peter Thiel, as a lead investor.

The company offers 3 main products:

• Palantir Gotham: This is the platform for identifying the outliers and used primarily by government agencies that look for bad actors hiding in complex networks. It’s also known as “needle-in-haystack“ analysis.
• Palantir Foundry: This platform simplifies data modeling. It enables users of varying technical abilities and expertise to work with complex data.
• Palantir Apollo: This continuous delivery software supports Gotham and Foundry. Its goal is to deliver the updates without disrupting ongoing operations.

Palantir Foundry 21, Source: (Palantir Technologies)

PLTR went public in September 2020 and has a market cap of $53 billion. The company currently employs 2,500 employees. After retracing from the $45 high, PLTR stock is currently trading at just over $28. An intermediate resistance is at $32, while strong support is at $24.

It is important to note that a lock-up period that is prohibiting insiders to sell their shares has just expired. Current short interest is under 6% indicating bullish sentiment.

Pros to Buying PLTR

From innovative technology to IBM partnership, here are some of the reasons why you might want to buy PLTR:

• State-of-art technology: PLTR is working on technology that is secretive and hard to reproduce. Therefore, it is hard to compete against. The company is a clear leader in the field, including niches that are almost void of any competition like counter-terrorism analytics. PLTR is industry-agnostic — its technology is serving a large number of clients over different sectors.
• Strong growth: PLTR reported 47% growth in 2020 with the average revenue per customer growing at 41%. The operating margin is at 17% while the revenue forecast growth is over 30%. Impressive numbers for a company that crossed $1 billion in yearly revenue. The 5-year outlook is to cross $4 billion in revenue.
• Government backing: Initially backed by the CIA, Palantir has a long list of clients within the U.S. government. This includes the FBI, DHS, NSA, CDC and many others. PLTR is in a unique position where it is getting entrenched within the public sector. With its technology becoming a matter of national security, PLTR can secure a stream of perpetual revenue.
• IBM partnership: IBM recently announced a partnership with Palantir Technologies. IBM will profit from Palantir's know-how while Palantir is gaining access to IBM's sales force of 2,500 employees. This is a major step forward for Palantir marketing that has a salesforce of only 30 employees.

Cons to Buying PLTR

Growth doesn't come without risks. Here are a few facts you might consider when investing in PLTR:

• Geopolitical restrictions: PLTR is growing fast but it is restricting itself to the domestic environment. Due to its involvement in national security, it is unlikely that its list of clients will ever expand to markets like China, Russia or even the EU.
• Not a true SaaS company: PLTR might look like a pure Software-as-a-Service company but it is not. While SaaS usually has no marginal cost for new sales, PLTR regularly makes adjustments for new customers. Customer acquisition costs have to be managed very carefully, otherwise, quick growth can be costly, even dangerous for the company.

Here’s one bad scenario, in theory:

by Stjepan Kalinic

• Unprofitable: Considering the generally accepted accounting principles (GAAP), PLTR is not yet profitable. If you adjust its liabilities for stock-based compensation, the loss is about $138 million, as reported for Q4 2020. Stock-based compensation is important because it comes at your expense — issuing new shares to compensate employees dilutes your stake in the company.
• High customer concentration: PLTR is relying on its top clients too much. While revenue from the top 20 customers increased from $495 million to $663 million, customer concentration dropped by only 6% (67% to 61%). If any of those 20 clients stopped using Palantir's services, that would cause a significant drop in revenue. As of 2022, nearly 250 companies use Palantir, giving the company a 0.15% market share. Currently, computer services, IT and higher education are the biggest users of Palantir’s software.

Game Changer in the Field of Data Analytics

From the COVID-19 response, through the automotive industry and to matters of national security, PLTR is positioning itself to be irreplaceable.

This doesn't come without risks, like with any other growth story. Yet, if these are properly managed, PLTR has the potential to become a household name within a generation.

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