Palantir Technologies (NYSE:PLTR) may have been growing rapidly in 2o21 but the investors in PLTR stock haven’t enjoyed the ride.
The stock has significantly declined over the past few months and is down 50% from the peak. It is exchanging hands at around $21 today.
After going public last year for $10 per share, the company has significantly shot up in terms of value.
Today, its valuation has gone from $16.5 billion to $39 billion. The maker of analyst tools for the defense industry and many other commercial clients recently reported Q1 earnings and beat analyst estimates. However, shares initially dipped on the report as investors weren’t happy with the results.
I am bullish on the stock for its growing clientele and impressive fundamentals. With that in mind, let’s dig deeper into the investment case for PLTR stock.
Robust Fundamentals
I see Palantir as a strong growth company that is slowly making strides in the commercial industry. It is known for relying heavily on government contracts, but the company has a few commercial clients in its line-up.
Anybody worried about the company’s performance can put their doubts to rest with the stellar Q1 results. The company reported earnings per share of 4 cents and revenue of $341 million. It is a whopping 49% rise year over year.
The government revenue stood at $208 million and commercial revenue was $133 million. Its average revenue per customer increased to $8.1 million from $7.9 million in 2020 and has picked up as compared to the past year.
It shows that customers are seeing the potential in the company and are willing to work with them. The net loss stood at $123.5 million and the adjusted free cash flow was $151 million.
The government business continues to overshadow the commercial operations, but a business growing by 76% in the year shows that the company is making the right moves.
I am of the opinion that government clients are stable and ensure a consistent flow of income.
The company added that it had 15 deals worth $5 million and six deals worth $10 million or more. The company attributed this growth towards the recovery in the U.K. and U.S. which boosted commercial growth.
One must not overlook the key factor that Palantir enjoys government loyalty and has played a significant role in the Covid battle. Further, it recently renewed the contracts with U.K.’s Royal Navy and U.S. Coast Guard. The U.S Coast Guard partnership has a base value of $6.25 million and a total amount of $11.25 million for nine months.
Palantir expects to hit $360 million in revenue in the second quarter and annual revenue growth of 30% or more through 2021 to 2025. The company also expects to produce $150 million in free cash flow this year.
Palantir started accepting bitcoin as a form of payment in a move that was welcomed by investors. The company’s future looks bright, and it is certainly making the right strategic moves.
PLTR has made its mark in the commercial sector with a partnership with Amazon (NASDAQ:AMZN) and IBM (NYSE:IBM). As the client base continues to grow, the revenue and EPS will follow.
The Bottom Line on PLTR Stock
The fundamentals look strong with a rise in adjusted free cash flow. We will see an increase in the number of clients and subsequently revenues in the coming year.
However, if you are looking to buy and make quick bucks, PLTR stock may test your patience. It has been showing volatility lately but do not expect a quick turnaround.
A strong tech stock, PLTR will require patience and with this dip, you can buy a small position. There is immense potential to grow and reap strong rewards.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
