Palantir (NYSE:PLTR) remains controversial and very tough to pin down. The company has maintained a strong base of detractors which only seems to grow stronger in its condemnation of PLTR stock.
However, the company’s polarizing nature may be part of the reason it continues to confound. Perhaps not, But in either case, Palantir is proving to be a stock that bucks expectations. That is what makes it worth your time.
The Rio Tinto Deal
Palantir recently signed a multi-year deal to leverage its Foundry analytics platform for Rio Tinto (OCTMKTS:RTNTF) in its mining operations. Palantir will create a single representation of Rio Tinto’s critical mining operations for the company’s workers in one centralized location. The upshot is that Rio Tinto employees will have streamlined decision-making tool.
For Palantir, the deal represents a win on a few fronts. First and foremost, this is a win from the perspective that Palantir has strengthened ties with a business partner. Secondly, Palantir is proving that it can win and maintain contracts outside of the federal arena. However, it is difficult to judge this against former contracts in that no specific numbers were released regarding the value of the contract itself.
PLTR stock didn’t move based on the news as share prices seemed not to react. Perhaps if Palantir can provide numbers relating to deal size and future revenue then markets will react.
When Palantir announced a $22.5 million deal on Jan. 4, PLTR stock rose by more than a dollar.
PLTR Stock Is Volatile Now
Or at least it should be, according to price expectations regarding its shares.
Palantir has bucked expectations since its IPO on Sept. 30. The prevailing notion since then has been that it deserves to trade at far less. At the IPO, shares traded for less than $10 and stayed that way for about the first month of trading. Shares then roughly tripled through the next month. Shares were essentially sideways, but volatile, for the next six weeks. And they jumped again to now sit around $35.
Something about Palantir doesn’t add up. And that makes it intriguing to the investment world. Go any place where analysts share pricing advice and you’re bound to see the same thing: the consensus is that PLTR shares ought to trade for much less than $35.
Doing Its Own Thing
For example, go to the Wall Street Journal’s coverage of Palantir and you‘ll see a bit of a confounding situation.
First of all, those analysts give it an average price target of $17.83. That’s roughly half of what it currently trades at. Secondly, even though their average rating has gone from slightly overweight and progressively gotten worse, shares simply continue to appreciate in price.
In most cases, Wall Street generally pegs a given equity with reasonable accuracy. In this case, Palantir just seems to get stronger as scrutiny increases.
Savvy or Just Lucky?
The last time that I wrote about Palantir back in December, I argued that it is simply a savvy organization. I still believe that to be true. The company is smart and has the know-how to navigate the broader environment. And, as many have noted, it is the antithesis to Silicon Valley models of business and values. That’s polarizing in a very polarized world.
Recent events have proven that concerted group efforts can yield unexpected results.
And more than the simple fact that Palantir speaks to a certain investor is the fact that it is also young. Initial revenue, profitability and other hard objective metrics simply matter less in the formative quarters of a company. It is relatively easy to assign traditional numbers based value on sales multiples or any other number of metrics.
The markets have proven throughout 2020 and 2021 that the unexpected continues to happen. I believe PLTR stock remains a buy because it simply continues to build its book of contracts, moves with skill, and has a strong base.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.