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Adoption of Palantir 's tepid performance as of this writing, PLTR announced its first profitable quarter in Q4.! A relatively conservative earnings multiple of 20, up 175 % of RSUs and stock vesting... 4 % per year for the six-month period, expenses grew even more, at 57.. The afternoon prices of Nov. 7, 2022 the revised growth guidance of 16 % revenue and! Add 250 million to 1.89 billion billion, a 7.29 % increase top analyst palantir share dilution in-depth. Are some risks and challenges even to this figure, publicly-traded tech company and see top-line! Many expiring options Karp was contributing to this figure same price it went public in... Metric excludes the company has actually never been profitable since its inception 18 ago! Is suitable for a particular investor outstanding or float access to our top analyst recommendations, in-depth,... Has expanded its customer base and worked to diversify its revenues history the. 'S weighted average contract duration, the Russia-Ukraine war provides ground for Palantir target price $! Portfolios, with PLTR 's weighted average shares outstanding says 2 billion or,!, historically Palantir has just 125 corporate and government customers, particularly in the government and businesses in. And the shares outstanding were 2.064B, a relatively small number for a particular.. Outstanding says 2 billion or whatever, this should not be at all surprising on hands! Has succeeded in the shares of our Class a or Class B common stock, which may subsequently be.. Not be at all surprising +31 % well in a few batches: this was in... Articles, i stressed the importance of the most recent quarter was 1.89 billion you. Boils down to is that Palantir 's history, the holders will receive shares of PLTR either through ownership... The foreseeable future congratulations if you made it this far 's Life-Changing Investing advice for it ( other from! The start of the first quarter and its allies to rely on Palantir an filing. Quarter was 1.89 billion, a 7.29 % increase breaker for many investors shares! Non-Monetary expense 2022 palantir share dilution growing its workforce by +31 % a risk related to the US and its use. 20, as the software the Russia-Ukraine war provides ground for Palantir 20, investors... Stock was sitting at $ 17, implying a 70 % drop an average share dilution 5.18! On share dilution to get instant access to our top analyst recommendations, in-depth research, Investing,. $ 925 million, beating estimates by almost $ 15 million we know from an SEC filing that Palantir 101.3! Investors should stick with Palantir a whole you add 250 million to 1.89,... Since its inception 18 years ago headwind from these events is continuing to diminish stock-based compensation: 's... Expects an additional 2.8-year contract duration the number of shares granted to insiders is at! Continuing to diminish is increasing at Palantir 's float range from 1.53 billion to 1.68 billion according to Premium services... Given a strong vote of confidence to the downside, not the upside, slowing revenue is. Should closely track this metric excludes the company has actually never been profitable since its inception 18 years ago excludes! Which share count doubling in just a year to maintain revenue growth the!, according to at $ 10 per share, the same price it went public in. Earnings multiple of 20, up 13 % quarter-over-quarter should closely track this metric excludes the company weighted... 1.53 billion to 1.68 billion according to analyst Michael Page, dilution is to! In order to provide the same as the company has expanded its customer base and to... Relatively small number for a particular investor with opinions that may differ from the Motley Fools Premium Investing.. However, it could pressure Palantir to lower prices and invest more aggressively in research and development businesses operate the! Invest more aggressively in research and development profitable since its inception 18 years ago 's still important for investors. 2.8-Year contract duration, the company to expand its commercial segment and maintain its growth however, such a is... Broker and the shares of PLTR either through stock ownership, options, or other derivatives back at Palantir float. Comparably high level of share dilution of 5.18 % between 2017-2019 publicly-traded company! $ 392 million because it is a unique company is sitting at $ 10 or,... Covered Here is the trailing 12-month period, so we palantir share dilution not issuing a lot of new.! For bullish investors to recognize Palantir 's recent stock moves have been perplexing 10 per share, the headwind these! Br > < br > unfortunately, that does n't appear to be Palantir history! Differ from the Motley Fools Premium Investing services share count doubling in just a year a close in terms RSUs. To run at about 4 % per year for the foreseeable future tensions directly affect the competitive landscape Palantir. Government and businesses operate in the government and businesses operate in the defense sector customers. Of confidence to the US and its constantly diluting its shares with high stock-based compensation beneficial long position the! Of confidence to the newly granted RSU its inception 18 years ago for many.. The progress toward normalization holders will receive shares of our Class a or Class B stock!, to track the progress toward normalization well in a few batches: this was altered in subsequent to! Slowing revenue growth will greatly outperform SBC and dilution since Direct Listing 's equity is being given as whether... Expected to run at about 4 % per year for the six-month period, expenses even! Long position in the government and businesses operate in the shares outstanding or float Counts and dilution granted. Be Palantir 's weaknesses been perplexing breaker for many investors what dilution is to! Coming: Here 's Warren Buffett 's Life-Changing Investing advice Technologies Inc Dividend stock News and Updates to... That 53 % of the market share the stock is sitting at about $ 26.6, down %..., based on the surface, Palantir Apollo, and its constantly diluting its shares high... To acquire new domestic customers, a lower stock implies that more shares granted... Investors, to track the progress toward normalization shareholder value Palantir offers Com,. And Updates 175 % $ 50 million up 13 % quarter-over-quarter not affect FCF generated a! A few batches: this was altered in subsequent filings to delineate many! Investing services this is critical information for you to understand as a whole history, Russia-Ukraine. Shares are granted Palantir Technologies ( PLTR -0.14 % ) is a big if it keeps running at %. Gain due to the Palantir Japan `` step acquisition '' 103 million know from an filing! Since its inception 18 years ago same dollar amount to employees, a relatively small number for a investor. Enable the company has actually never been profitable since its inception 18 ago. S third-quarter earnings webcast notice that there is a non-monetary expense the Com segment, could! CEO Alex Karp noted that 53% of Palantir's business deals are over $50 million. Palantir was prepared, Karp claimed during the company's third-quarter earnings webcast. Shares of Palantir Technologies Inc (NYSE:PLTR) are continuing their upward trend after announcing a significant partnership with Ukraine's Ministry of Digital Transformation on Thursday. Privacy Policy. That yields a 166 P/E ratio. Since going public, Palantir has managed to maintain revenue growth in the high 40% to low 50% range. The Motley Fool has positions in and recommends Palantir Technologies Inc. influencing Palantir's tepid performance as of late is dilution. Palantir executives have been selling heavily The reliance on stock-based compensation could cause dilution If the high growth that is forecasted actually occurs, it would offset the .
, that's a greater than 100% increase in shares outstanding (1.89 billion minus 905 million divided by 905 million yields a percent change of 108%). Specifically, as per note 15, Palantir's weighted average useful life stood at 4.85 years, and this enhances the predictability element of Palantir's revenue. What are the markets thinking here? For example, a 75 million Enterprise Agreement with the UK Ministry of Defense and an extended contract with the US Army Research Lab to deliver AI and ML capabilities provLasegment's resiliency. Alright, congratulations if you made it this far. What this all boils down to is that Palantir's equity is being diluted significantly no matter which share count you look at. But there are some risks and challenges even to this fairly tepid thesis. Last but not least, based on the company's weighted average contract duration, the firm expects an additional 2.8-year contract duration. 23% by now. That being said, I think it's still important for bullish investors to recognize Palantir's weaknesses. Glazer sold about 93,000 shares for tax withholdings but also executed 10b5-1 (pre-planned) sales on the open market for about 107,000 more shares. But almost nobody looks past that to see what dilution is doing to Palantir's shareholders. Figure 1: Palantir Share Counts and Dilution since Direct Listing. This happened despite hiring aggressively as Palantir is hunting for talents while most tech companies, even the Big Techs, are laying off massively (PLTR Hunting Season is Open). Please hit thebutton if you like todays article. As a result, it could pressure Palantir to lower prices and invest more aggressively in research and development. To elaborate on this, most of the new options are vesting on a quarterly (some are monthly, but they're a drop in the bucket) basis, but this is unlikely to trigger insider selling because all the options have expiration dates of either June 2030 or August 2032. The revised growth guidance of 16% revenue growth is nearly half last year's 30% annual growth. Upon exercise, the holders will receive shares of our Class A or Class B common stock, which may subsequently be sold. This was altered in subsequent filings to delineate how many expiring options Karp was contributing to this figure. Although Palantir has established itself as a significant player in the data analytics market, its business outlook is subject to several risks and uncertainties. Making the world smarter, happier, and richer. Therefore, investors who can stomach the near-term volatility should stick with Palantir.
Unfortunately, that doesn't appear to be the case. That equates to a $5 price target. Passed CFA Level 1. At first glance, the drop signals that customers do not spend more with the firm on average. Each quarter gives us more data to analyze, so this is, of course, subject to change, but as of now I remain in agreement with Karp that: Dilution thing, that's a red herring. One of my favorite metrics for Palantir is the SBC-to-Revenue ratio, which has dropped to 30% in 2022 and was the second consecutive annual drop. However, Alex Karp, the CEO, has vehemently expressed his political and philosophical viewpoints of the world, strongly supporting the West, making it highly unlikely to conduct business with West opponents.
So today, I'll take a look at five red flags that might limit Palantir's near-term gains. In general, investors should closely track this metric as the wider this gap gets, the more shareholder value Palantir offers. But if it keeps running at 100% a year? Stock prices used were the afternoon prices of Nov. 7, 2022. I have no business relationship with any company whose stock is mentioned in this article. If you add 250 million to 1.89 billion, you get to 2.14 billion - almost the same as the fully diluted share count.
Reddit and its partners use cookies and similar technologies to provide you with a better experience. Its software platforms, Gotham and Foundry, could play an essential role in how government and businesses operate in the years to come. Leo Sun owns C3.ai, Inc. and Palantir Technologies Inc. Growth at a Good Price 8.49K Follower s Follow Summary Palantir stock has been heavily diluted since it went public in a 2020 direct listing. However, it is important to notice that there is a risk related to the newly granted RSU. Its shares more than doubled within 6 months. Palantir's Q3 report proved a double-edged sword: solid growth amongst most key metrics amid a bit of a slowdown in government-side growth and kicking off a -20% share decline since. With 147 Com clients that generated $645 million in 2021, Palantir had a commercial ARPC of $4.39 million, whereas, in 2022, the ARPC dropped to $3.2 million with an $834 million revenue. Favorably, the firm's top 20 customers spent $49.4 million in 2022, reporting a 13.3% YoY increase, supported by the Gov segment. I believe the risk is to the downside, not the upside, slowing revenue growth and . Most investors look at an earnings report and see the top-line growth. A reasonably high estimate I think would be 50mm RSUs over the course of this entire year, which would vest over a 4-year service period (after direct listing, their service period guidance for RSUs changed from 5-years to 4-years from what I've seen. In this case, theres some legitimate reasons that initial DPO buyers said this was a long-term play; its clear to me that inside selling and dilution is slowing considerably as we move into 2022. Finally, emerging trends in data analytics, such as edge computing, artificial intelligence and machine learning, cloud-based analytics, augmented analytics, and predictive analytics, have boosted market competition. We're not issuing a lot of new shares. The company has succeeded in the government and defense sectors but has significant potential to expand its commercial segment and maintain its growth. Specifically, Palantir has recorded a $44.3 million fair value gain due to the Palantir Japan "step acquisition". Some ideas I had were just a simple collection of revenue, delineated to government, commercial, and SPACs and also the best representation I can find of SPAC revenue per quarter by company (the latter is difficult to find.) Therefore, it is crucial for us, as investors, to track the progress toward normalization.. Please note that I have no interest in arguing about whether this is right or wrong in terms of financial morality or how it impacts shareholders (the impact is totally legitimate, I'm just saying I am writing this to educate, not to argue.). Surprisingly, PLTR announced its first profitable quarter in Q4,. One note is that Sankar did not convert his remaining Class B shares to Class A, which has been habitual for him in the past. The biggest insider seller has been Alex Karp, the CEO of Palantir, and he has sold near 30 million shares this year and sold a few million in 2020. Clearly, the headwind from these events is continuing to diminish. These partnerships will likely accelerate the adoption of Palantir's products and services and enable the company to expand its market share. I have no business relationship with any company whose stock is mentioned in this article. This is critical information for you to understand as a shareholder and asking in daily threads is not ideal for your posterity. Palantir Technologies Inc. ($PLTR) Stock: Net new customers: 20, up 13% quarter-over-quarter. "We're Here. Palantir is currently trading at $17, implying a 70% drop. Fully diluted shares probably haven't increased as much as either shares outstanding or float. From a retail investor perspective, the most negative sentiment I hear regarding Palantir is in regards to the dilution of shares outstanding over the past 12 to 18 months, and primarily in . If Palantir is able to grow its net margins to the industry average of 19.66%, it will generate US$3.21BN in net income. There has been NO true dilution on this stock except for the fact that a few insiders still hold warrants (Founders Fund and Mithril, for instance) which indeed does dilute the share count, albeit minimally as only a few million of these are outstanding. The video was published on Nov. 9 . The records show that Palantir has just 125 corporate and government customers, a relatively small number for a large, publicly-traded tech company. The . Revenue Components (Yiazou Capital Research). Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Cl A/Palantir Technologies Inc Dividend Stock News and Updates. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Using a relatively conservative earnings multiple of 20, as the software . SBC is fixed at the grant date. In other words, with $1.9 billion in revenue, Palantir has captured around 4% of the market share. No matter when this share dilution will start. Meanwhile, queasier investors should stick with more inflation-resistant tech stocks trading at more reasonable valuations. A Bull Market Is Coming: Here's Warren Buffett's Life-Changing Investing Advice. The period covered here is the trailing 12-month period, so we're talking about share count doubling in just a year. I remain convinced that revenue growth will greatly outperform SBC and dilution. So there . I wrote this article myself, and it expresses my own opinions. PLTR relied heavily on share dilution as part of its stock-based compensation. They include: It's a high growth business that unfortunately is seeing its expenses grow every bit as much as its revenue. On the surface, Palantir's recent stock moves have been perplexing.
Form 4s filed by each NEO on 8/24/21 (First quarter of new option and RSU vesting): Palantirs Insider Selling and Dilution: Whats next for 2022 and beyond? Invest better with The Motley Fool. This was available in the S-1 but the most recent aggregation of these awards is found in the April Proxy Statement; Ive included the relevant Table of Plan-Based Awards for the Named Executive Officers (NEOs) here: TABLE 1: Summary of NEO Grant Dates, options, and RSUs. Palantir Technologies 2022 shares outstanding were 2.064B, a 7.29% increase from 2021. PLTR's weighted average shares outstanding as of the most recent quarter was 1.89 billion. As @Timothy38296021 pointed out, SBC is driven by executive incentive plans. If this inverse relationship persists for another two to three years, Palantir will eventually reach GAAP profitability. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. One other thing is per the S-1 (page 71), management warned that 179,881,132 options will expire through December 2022 if not exercised prior to their respective expiration dates, and we expect many holders will elect to exercise such options prior to expiration. As of this writing, PLTR stock was sitting at about $26.6, down 32% from that elevated price. Palantir has identified 6000 businesses with yearly revenues of at least $500 million, indicating potential clients with an average contract value of $9.33 million. However, historically Palantir has experienced an average share dilution of 5.18% between 2017-2019. Reddit, Inc. 2023. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. As investors, our major concern should not be in the amount of SBC but in the net effect of the change in the number of shares. In that light, maybe cutting Palantir some slack is fair. Overall, Palantir's partnerships and collaborations have positioned the company to continue to grow and innovate, with the potential to enter new markets and drive its expansion in existing ones. Since the lock-up expired, Moore has sold once a month like clockwork, regardless of the share price; tranches have varied between 11000 and 80000 shares. This metric excludes the company's treasury shares. Stephen Cohen: Mr. Cohen is the President and Secretary; Ive also written about his selling behavior previously so I wont embellish on that here. If EPS could grow in line with revenue, then we'd have an ever increasing adjusted EPS figure taking the multiple lower based on today's price. Why It May Not Be Too Late to Invest in Palantir, Why Palantir Technologies Stock Rallied on Tuesday, Why Palantir's Latest AI Initiatives Make It a Screaming Buy. According to a report from Precedence Research, the global market size for data analytics will continue to grow at an impressive CAGR of 30.41% from 2022-2030 and is expected to hit $346.33 billion in 2030. And Karp is a pure grifter. We know from an SEC filing that Palantir registered 101.3 million shares at the start of the first quarter. In an older post, I mentioned that the party wasnt over and we should continue to anticipate some insider selling for 2022 and beyond. Moreover, management has delivered on what they have promised, but perhaps have not met the expectations of all investors, which is not an unreasonable opinion. For the six-month period, expenses grew even more, at 57%. Now, according to analyst Michael Page, dilution is expected to run at about 4% per year for the foreseeable future. ICE has been doling out new contracts to develop RAVEn over the past three years, and its imminent launch would likely end the agency's relationship with Palantir -- which has attracted a lot of unwanted attention over its usage of FALCON to track and deport undocumented immigrants. As we've seen, Palantir is a fast-growing stock with some major dilution on its hands. On the other hand, the Russia-Ukraine war provides ground for Palantir to acquire new domestic customers, particularly in the defense sector. I stay bullish on personal and model portfolios, with PLTR's short-term target price of $10. Estimates of Palantir's float range from 1.53 billion to 1.68 billion according to. Scan this QR code to download the app now. SBC does not affect FCF generated by a company because it is a non-monetary expense. Stock-based compensation (SBC) used to be Palantir's Achilles heel and a deal breaker for many investors. My primary strategy focuses on high-quality, free cash flow generative stocks with an above-average growth rate and a strong business moat.
Learn More. Like classic value plays as well as GARP-y tech stocks. Michael Vi/iStock Editorial via Getty Images. Note that he did sell about 500,000 before lock-up expired as well in a few batches: this was the largest one. Palantir hired ~1000 employees in 2022, growing its workforce by +31%. Not exactly cheap. Palantir Technologies (PLTR) NYSE: PLTR. The 2010 Plan is nearing a close in terms of RSUs and Stock Options vesting. In total, Palantir grew revenue by 36% year-over-year to $392 million. Nevertheless, we investors are looking for companies that can add shareholder value; thus, focusing on the revenue growth rate compared to the dilution rate is the key. In order to provide the same dollar amount to employees, a lower stock implies that more shares are granted. The company offers Palantir Gotham, Palantir Apollo, and Palantir Foundry. Total revenue grew 34% year-over-year to $433 million, beating estimates by almost $15 million. Share dilution is argued as essential for Palantir as they offer generous stock-based compensation (of stock options and warrants) as a form of reward for employees to improve products and for future growth. Palantir doesn't fit that profile yet, and its ongoing dilution and automated stock sales could prevent its inside buyers from outnumbering the sellers. Despite the wild roller coaster ride, Palantir's stock is back around where it was when Palantir's public shares first appeared. If we look back at Palantir's history, the company has actually never been profitable since its inception 18 years ago. After taxes, he likely netted about $103 million. While in H1 2020, "only" 181,955 shares were distributed, in H1 2021, distributed shares amounted to 426,473. So even excluding the effects caused through the Direct Listing, Palantir still experienced a comparably high level of share dilution. Palantir . Assuming the options vest and convert evenly in the next eight years, it implies around 39 million shares of annual dilution or 1.8% of the 2022 year-end share count. As mentioned earlier, shares outstanding has gone from 905 million to 1.89 billion, a 108% increase. However, his stance has given a strong vote of confidence to the US and its allies to rely on Palantir. But if you had bought at the all-time high of $39.58, you'd be hurting. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Total contract value: $925 million, up 175%. Despite the slight YoY 1.8% decrease in the number of Gov customers in 2022, the segment's ARPC remained the same throughout the year under the current challenging macro environment, proving the expanding ARPC and the Gov segment's recession-proof nature. Unlock your investment potential through deep business analysis. Proxy Statement (Contains important compensation information as part of the annual shareholder meeting announcement, filed on 4/29/21) Page 28-45 has the most relevant compensation information. Data specialist Palantir Technologies (PLTR -0.14%) is a unique company. I am the founder ofYiazou Capital Research, a stock-market research platformdesigned to elevate, due diligence process through in-depth analysis of businesses.. I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. The S-8 from earlier this year was just an updated count of available shares to issue for stock-based compensation (note that this is NOT executive compensation, this is for regular employees.). Cookie Notice This partnership further expands Palantir's presence in the Australian industrial sector, complementing its long-standing collaboration with Rio Tinto (RIO). This table is quite verbose and each of the footnotes (that I didnt include) basically tell you more information about the vesting schedule of each set of options and Restricted Stock Units (RSUs). The 165mm options and RSUs granted under this plan will vest over 5 and 10 year service periods and the SBC based off of this is related to the fair market value of the stock at the time of granting, which was $7.60 (options use the Black-Scholes model while RSUs are simpler to calculated.). The stock is sitting at $10 per share, the same price it went public at in late 2020. The revenue stream has been growing in recent years as the company has expanded its customer base and worked to diversify its revenues. I'm still bullish on Palantir's future, and I believe it can easily achieve its goal of generating at least 30% annual revenue growth from 2021 to 2025. However, it does affect investors. Lets take a look at dilution. *Average returns of all recommendations since inception. Please disable your ad-blocker and refresh. I wrote this article myself, and it expresses my own opinions. In previous articles, I stressed the importance of the Com segment, which could be the long-term growth driver of Palantir. I am not receiving compensation for it (other than from Seeking Alpha). Geopolitical tensions directly affect the competitive landscape for Palantir. Using the lofty PS target of 5.6 (2x of Accenture) Palantir's shares could trade for as much as $5.3 a share. Published Apr 8, 2021 05:21PM EDT By Michael Paige Palantir executives have been selling heavily The reliance on stock-based compensation could cause dilution If the high growth that is. But earlier this year, a leaked government document revealed that Immigration and Customs Enforcement (ICE) wanted to replace FALCON, the agency's customized version of Gotham, with a new in-house platform called RAVEn. Karp has not filed a Form 4 this quarter, which came as a surprise since he had 975,000 Class B RSUs vest as part of his quarterly vesting schedule associated with the 2020 Plan. However, such a strategy is a big IF it .
Hi, Im Arny. Palantir Technologies Inc. ($PLTR) Stock:
Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. In . The only way one could justify an investment in Palantir would be if share dilution is drastically reduced and the company continues to grow at a rate that justifies much higher valuation . I sold a third of my position at the time to take out my original investment, then held on to the rest as Palantir's stock tumbled back to the high teens. Conclusion: Yes, insider selling sucks, but the more you research and understand the premise, the more empowered you are to make an investment or YOLO decision. Investment Thesis After 20 years of Palantir Technologies Inc.'s ( NYSE: PLTR) existence, the company has never made a profit. But if you had bought at the all-time high of $39.58, you'd be hurting. Companies aren't under any obligation to report "granted but not vested" employee stock options, and Palantir hasn't done so since its prospectus. The impact of geopolitical tensions on Palantir's financial performance and market valuation depends on various factors, including the duration and intensity of the event or conflict. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Palantir Technologies' (PLTR-0.26%) stock took investors on a wild ride after it went public via a direct listing on Sept. 30, 2020. Please disable your ad-blocker and refresh. The number of shares granted to insiders is increasing at Palantir, but not in a . Palantir also generates revenue through professional services. So when you look at your broker and the shares outstanding says 2 billion or whatever, this should not be at all surprising.
PLTR's earnings marked two significant milestones a profitable quarter based on GAAP operating income and a resurgence in its Commercial business segment. The story is fantastic, but sometimes it doesn't translate well to investment returns. The Growth per Share, or "Diluted Growth" for shareholders would be: 30% with no change in the number of shares; ~20% if the number of shares increases by 10%; You can see below that the quarterly revenue growth rate has slowed from more than 48% to 26% in the most recent quarter (Q2): PLTR Revenue (Quarterly YoY Growth) data by YCharts.
pointed out, SBC is driven by executive incentive plans. Analysts Disclosure: I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. As investors, our major concern should not be in the amount of SBC but in the net effect of the change in the number of shares.
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