The adage "data is the new oil" conveys the importance of information in our modern society. However, raw information by itself isn't enough – it's only useful if one can derive meaningful insights from it, which represents the value proposition of Palantir Technologies Inc. (NASDAQ:PLTR). Founded in 2003 by Alex Karp and Peter Thiel and becoming a publicly traded company in 2020, Palantir specializes in uncovering patterns in data and presenting information in ways that are easy to process and navigate, such as charts and maps. In recent years, investor and stakeholder sentiment towards the firm has been mixed; its equity performance has been strong, but its close affiliation with the current U.S. presidential administration has made onlookers wary. Against this backdrop, recent actions by the firm continue to foster mixed emotions, raising questions about the company’s direction going forward and supporting investors on both sides. 

A Look At Business Operations

Palantir's recently reported quarterly performance showcased a company achieving exceptional success. Revenue for the firm grew 39% year-over-year and 7% quarter-over-quarter, reaching $884 million. U.S. revenue amounted to $628 million, increasing 55% year-over-year and 13% quarter-over-quarter. U.S. revenue included U.S. commercial revenue and U.S. government revenue, which were $255 million and $373 million, respectively. As a result of the firm's success, revenue guidance for the year has been raised to between $3.89 and $3.90 billion.

An arena in which Palantir's success has gained significant attention is its government contracts, which have proven to be quite beneficial and lucrative for the firm. As reported by the New York Times, the company has received more than $113 million in federal spending since President Trump took office. However, Palantir was also a vendor of choice in the previous administration, as the firm signed a contract during the pandemic to manage the distribution of vaccines through the Centers for Disease Control.

The growth and adoption of Artificial Intelligence present a significant opportunity for Palantir, as the firm's latest vertical, the Artificial Intelligence Platform (AIP), is a large language model orchestration tool that enables businesses to integrate generative AI into their operations. AIP allows companies to build AI bots that understand their structure, data and business concepts, bringing to light new insights as updated information becomes available.

Concerns About Profiling & Valuation

At the same time, there are growing concerns regarding how the U.S. government will use information gathered by Palantir. President Trump signed an executive order calling for increased information sharing across agencies. The emerging concern is that if the U.S. government can create a comprehensive profile of its citizens, this information could be misused or weaponized. This concern has become particularly acute for many considering the current raids by U.S. Immigration and Customs Enforcement. Given the depth of information Palantir has at its disposal, its involvement in creating profiles of U.S. citizens has been raised.

The equity performance of Palantir in recent months has been particularly compelling; however, its valuation has come into question for some. As noted in a recent Financial Times article, Palantir is an expensive stock, given its enterprise-to-sales ratio. According to the analysis conducted by Trivariate Research, a firm with an enterprise value exceeding 30 times its forecasted sales is not normal; as observed from the chart below, Palantir is currently at 80. The takeaway here is that while Palantir’s business operations may be strong, some are concerned its current market valuation may be inflated.

Gaining Comprehensive Exposure To Palantir With Direxion

For tactical investors looking to gain short-term exposure to Palantir, Direxion Daily PLTR Bull 2X Shares (NASDAQ:PLTU) and Direxion Daily PLTR Bear 1X Shares (NASDAQ:PLTD) offer enhanced, pure-play exposure to the stock. These leveraged & inverse ETFs are designed to track the daily performance of the company’s common shares, enabling investors to gain exposure to the stock's movements with returns of 200% or 100% of the inverse, before fees & expenses, respectively. It is important to note that these solutions are intended to take advantage of short-term trends and should not be held for more than a day.

Whether bullish or bearish on Palantir, these ETFs can help traders easily engage with the firm's growth patterns. However, it’s crucial to approach these leveraged products with a clear understanding of their risks. While the amplified exposure can translate to significant gains, it can also lead to substantial losses. These ETFs are best suited for those who can actively manage the inherent risks of leverage and are looking to capitalize on short-term trends occurring with the firm.

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Palantir Technologies Inc. Investing Risk – Palantir Technologies Inc. faces risks associated with: a limited number of customer accounts for a substantial portion of its revenue; the development and deployment of new technologies; reliance on or capability with third-party products and services; the ability to hire, retain, train and motivate qualified personnel and senior management; sales and operations; intense competition; among other risks.

Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Software Industry Risk — Companies that develop and implement computer software can face risks associated with intense competition, especially in new product development, deployment and delivery, product obsolescence or saturation, cybersecurity risks as well as changes in regulation especially with respect to consumer or customer data, and risks associated with technology.

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