by Ian Harvey
November 19, 2020
Palantir Technologies is on a rapid movement upwards after the quiet period expired and sell-side initiations of the stock are gaining traction.
Stock Options Made Easy “Mentorship”Members are already well positioned to continue profiting from PLTR’s growth. The group executed an options trade yesterday on PLTR stock.
How high will the stock trade?
Wall Street seems to be starting to understand the massive upside potential that Palantir has to offer as they can now see that it is a fairly unique business. When Palantir first started trading in the market, Wall Street's perceptions were initially more focused on the risks and the uncertainties around the company's business model; but that thought has changed quite a lot over the recent times.
The idea behind the options trade recommended to our “Mentorship Members” maybe better explained by looking at the reasoning behind the trade.
As well, it is worth mentioning that our “Armchair Trader Members,” who executed a trade on Palantir Technologies on October 28 are now up 296% potential profits!
Here is a transcript explaining the reasoning for the recommendation......
“Palantir Technologies Inc (NYSE: PLTR) is on a rapid movement upwards after the quiet period expired and sell-side initiations of the stock are gaining traction.
Palantir Technologies gained 12% on Tuesday after the hedge fund run by legendary investor Steve Cohen disclosed a purchase of 29.9 million shares. The stock has climbed steadily since its late September debut, and Cohen's Point72 fund is apparently bullish the data analytics stock can continue to perform.
As well, our “Armchair Trader Members,” who executed a trade on Palantir on October 28 are now up 296% potential profits – now it is time for you to profit!
The shares have gained 70% since the U.S. presidential election as some of the uncertainty around what the government will look like in 2021 has cleared.
Palantir Technologies is backed by Peter Thiel, a venture capitalist known for his conservative leanings, and the company has been caught up in controversies surrounding its work helping to enforce immigration policies and with helping to target drone strikes.
YOU NEED TO BE IN TO PROFIT!
Palantir Technologies Inc builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations.
It offers Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
Unlike most other IPOs this September, Palantir went public via a direct listing; that's when the company "directly" lists its stock on an exchange, letting the public market decide the price, instead of banks raising money from funds and setting the price before the public can trade it.Palantir Technologies is a big-data software platform that has its roots servicing the U.S. armed forces during the war on terror, but has since used its big data capabilities to penetrate other branches of government, such as the Department of Health and Human Services, as well as commercial customers that may also benefit from its capabilities.
Palantir Technologies recently posted its first quarterly report as a public company.
Palantir's total revenue rose 52% year over year to $289.4 million during the third quarter of 2020, beating estimates by $10.1 million.
Palantir operates two main platforms: Gotham for government customers and Foundry for enterprise customers. Both services gather information on users from disparate sources to craft actionable data.
Gotham accounted for 56% of Palantir's revenue during the quarter, up from 51% a year earlier, while the remaining 44% came from Foundry.
Foundry's revenue rose 35% year over year to $126.8 million during the quarter, as it pulled a "major consumer goods company" from an unnamed rival, but it still couldn't keep pace with Gotham, which grew its revenue 68% year over year to $162.6 million.Palantir Technologies ended the quarter with 132 customers, up from 125 at the end of the second quarter. That number might seem low, but each of those large customers generates millions of dollars in revenue.
In the first nine months of 2020, its average revenue per customer rose 38% year over year to $5.8 million. Its average revenue for its top 20 customers also grew 36% to $23.6 million.
Palantir generated 61% of its revenue from those top 20 customers during those nine months, down from 68% a year earlier.
Palantir's top-line growth looks solid, but its net loss widened year over year from $139.9 million to $853.3 million. That trickled down to a loss of $0.94 per share, which broadly missed analyst expectations by $0.77.
Most of that loss was attributed to $847 million in stock-based compensation (SBC) expenses related to its direct listing in September. But excluding those messy SBC expenses, its gross margin actually expanded year over year from 71% to 79% during the third quarter.
Palantir currently expects its revenue to rise 44% for the full year, compared to its prior forecast for 42% growth. It also expects its revenue to grow more than 30% in fiscal 2021.
Based on those estimates, Palantir's stock trades at 28 times this year's sales and less than 22 times next year's sales. Those valuations might seem high, but they're actually much lower than the price-to-sales ratios of some other recent high-growth tech IPOs.
It secured three major deals during the quarter: a $91 million contract with the U.S. Army, a $36 million contract with the National Institutes of Health, and a $300 million contract renewal with an unnamed aerospace customer.
A U.S. Army contract, which will bolster its artificial intelligence (AI) and machine learning capabilities over the next two years, significantly boosted Gotham's revenue.
New contracts in third quarter included a $91 million deal with the U.S. Army, a $36 million contract with the National Institutes of Health $36 million and a $300 million renewal with an aerospace customer.
Palantir is more of a hybrid than a pure-play defense contractor, but the defense and government business for now at least is what is paying the bills and attracting attention. With the company now trading at more than 30 times expected full-year sales, it is an expensive stock to own no matter what it is, but for now the momentum is pushing Palantir higher.
Palantir has robust revenue growth, expanding margins, and reasonable valuation, and it could also be a great stock to own during a recession, since its government contracts are well-insulated from macro headwinds.”
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!