Silicon valley’s secretive start-up Palantir (NYSE:PLTR) has consistently expanded the business over the past year. After going public in September 2020, PLTR stock has seen a 140% rise and has made early investors richer. The recent volatility in the stock is mainly due to the sell-off and the expiration of the post-IPO lock-up.
With the vaccine rollout and optimism about the future, the sector is heading towards better days. The stock declined 40% since the February highs and is trading at $24 today.
So, is the stock a buy? If you are looking to buy and hold, PLTR stock looks attractive. Let’s dig deeper into the driving forces behind the stock.
PLTR Stock Will Soar Soon
Earlier, Palantir Technologies was criticized for solely focusing on the government sector. However, the company has expanded in the past few months and has many commercial clients in its kitty. If the company wants to generate revenue and profits, it needs more commercial clients and it is hitting the right spot. The software products of the company cover an equal revenue split between government and commercial clients. There is a huge possibility of expansion in both industries.
Over the last year, the company’s government business has soared. It signed deals related to the vaccine rollout and while these deals may close soon, the commercial business is going to pick up. The company has separate platforms- Gotham and Foundry that offer a solution for commercial and government businesses.
Specifically, the company is selected by the National Nuclear Security Administration for Infrastructure, Office of Safety and operations for an agreement of $89.9 million for 5 years. Additionally, it recently won a $90 million Energy Department 5 year contract. It also entered into a 6 year partnership with Faurecia, a leading automotive technology company. The company will use the Foundry software to get insights into the data. These types of contracts justify the valuation and price of the stock.
As the company continues to expand across government and commercial clients, the revenue is only going upwards and so is PLTR stock.
Fundamentals remain strong
Investors are concerned about the value and fundamentals of the company. Palantir Technologies may have a high valuation and it is not profitable yet but the revenue outlook looks very strong. The company has been around for 17 years, and generated $1.1 billion in 2020 without reporting profit. In Q4 2020, the company reported a growth in government revenue by 85% and commercial revenue by 4%. It is constantly making moves towards the expansion of the commercial client base.
It reported Q4 revenue of $322 which outpaced the expectations of the Wall Street of $301 million. Palantir is expecting a 45% revenue growth for Q1 2021 and it looks like a good possibility for the company to achieve that.
It has a strong liquidity position with a cash balance of $2 billion. The company is heavily investing in the business and it has enough cash to use while the business expands. The company’s assets far surpass the liabilities, so there is nothing in the balance sheet to worry about.
The bottom line on PLTR stock
PLTR stock is valued appropriately right now. It is a good time to take a long-term position in the company. It may not be profitable yet but it is taking huge strides with the latest contracts. The financials look stable and its market share is growing with each new commercial client. Palantir Technologies has a huge market to cater to and it is already working with some of the biggest names in the government sector.
All in all, the company has a strong future and PLTR stock could rise in the coming months. For now, buy and hold.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.