Dear Reader,
Palantir Technologies Inc, the artificial intelligence product and service company, recently doubled its market price since its recent IPO.
I forecast Palantir could easily further double its market capitalization within two years. Artificial intelligence is the most promising future technology. We are in in the midst of the fourth industrial revolution where algorithms guided by artificial intelligence are replacing more and more manual labor.
Palantir is at the crest of this new technology wave offering both scalable artificial intelligence products and tailor made services. The company has many contracts with the US government and other corporations. Its revenue is growing with approximately 50 % year on year. Other technology companies like Zoom Video are trading at much higher Price/Sales multiples than Palantir, which means Palantir could further grow into a higher valuation.
Yes, Palantir is heavily loss making, but if the company goes on increasing its revenue by more than 40 % profitability will soon come.
All in all I regard Palantir as 50 % undervalued within the next 1 year, barring a stock market crash lead by the Nasdaq Composite and mainly technology companies.
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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
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Respectfully yours,
Petar Posledovich
1 comment:
I do not know how to properly assess growth stocks, since those do not pay dividends. They do have PE ratios though. What would be Palantir's comparative advantage compared to Google or Facebook? Would it be that they are in some contractual obligation with the government?
Then looking at the current price compared to historical price - the price is around 90% of its all time high.
If we are to be contrarian, we should then wait to buy when the price gets lower and we buy value.
If the stock market falls because of the pandemic situation worldwide, then the 10y US treasury bond yields would go negative and stocks will further fall, I think gold can fall short - term as well.
Then maybe we would rather wait as see what happens next year.
Probably dollar cost averaging strategy works best.
We can actually try to time the market. "Timing" means we can buy cheap stocks - 25-30% of their all time high, if they are historically cheap or sell expensive stocks, if price is above value.
Cheers,
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