Palantir Strikes a Promising Deal With Hyundai

Palantir Technologies (NYSE:PLTR) could do no wrong a year ago. PLTR stock traded higher than $35, an almost five-fold increase on its September 2020 IPO reference price. 

A close-up shot of a hand on a screen with the Palantir (PLTR) logo.
Source: Ascannio / Shutterstock.com

Ever since then, it’s ridden its way down into the teens. As I write this, It’s changing hands below $17, about half the amount from January 2021.

If you bought at 2021 high, you’re not too happy. However, if you bought on the first day of trading – somewhere between a high and low of $11.41 and $9.11, respectively – you’ve got to be ecstatic 14 months later. 

I continue to believe that Palantir has what it takes to become a $100 billion company. 

Its recent joint venture announcement with Hyundai Heavy Industries (HHI) suggests big things are on the horizon. 

Let’s consider the possibilities.

A $50 PLTR Stock

To get to a $100 billion market capitalization, Palantir needs to trade above $50. That’s almost 200% appreciation based on current prices. The Hyundai joint venture could lay the groundwork.

Here’s why. 

The two companies are working to build a big data platform for HHI’s core businesses, including shipbuilding, offshore structures, naval shipbuilding, and marine engines. 

HHI’s history dates back to 1972. Five decades later, the company expects to win $17.4 billion in new orders in 2022. It needs to stay on top of its data being so large. Palantir Foundry is going to help it do just that.

Not only does this give Palantir another test case to demonstrate that it’s fully capable of creating data platforms for commercial contracts and not just government agencies, but it also has an opportunity to take the relationship beyond a software vendor.

“Once the big data platform for each affiliate is built, the two parties plan to create a joint venture that specializes in developing and selling big data platform services. Based on the accumulated achievements, the joint venture will commercialize big data solutions from platform construction to operation to generate sales targeting domestic and foreign companies,” states the Jan. 5 press release. 

This joint venture provides Palantir with an excellent entry point into the Asian market. Moreover, demonstrating that it can work with one of the largest shipbuilders in the world gives it a calling card like no other. 

HHI wants to build a smart shipyard by 2030. Palantir will help it get there. Both companies will get what they want while learning the ins and outs of marketing big data platforms to other companies. 

In the end, it could be a very lucrative joint venture for both companies. 

It might not be enough to get PLTR to $50 by the end of 2022, but it helps move the needle, and that’s all that matters.

How About $100 billion by 2023?

InvestorPlace’s Tim Biggam recently suggested that Palantir stock was getting ready to pop. Analysts give it a reasonable target price of $23.14 and some of our other contributors are also quite bullish about its future early in 2022. 

Biggam comes at things from a technical point of view. He sees $17.50 as a major support level, so if it is to get moving, it will need to recover some from where it currently trades at closer to $16. 

However, as Biggam suggests, its “nine-day relative strength index” has reversed course, putting the worst behind it. 

In December, InvestorPlace contributor Mark Hake spoke highly of Palantir’s profitability. He highlighted its 30% free cash flow margin in Q3 2021. Further, Hake points out that analysts expect it to grow its revenue over the next two years by almost 70%.

Other positives in Palantir’s third quarter included 34 net new customers, 46% growth in the number of commercial customers, and U.S. commercial revenue growth of 103%.

Palantir’s commercial business might only account for 41% of its overall business, but it’s coming along like gangbusters. The HHI collaboration is indicative of the segment’s growth. 

I, for one, look forward to an income statement that’s evenly split between the two or tilted to the commercial side of the street. That said, its government business is equally profitable in terms of its contribution margin – they’re both around 56% to 57% – so shareholders need not worry either way. 

A buck is a buck.

The Bottom Line

I agree with Hake when he states Palantir is very undervalued. 

Palantir announces an exciting partnership and the market barely reacts to the news. That’s a sign of a disconnect between investors and the company. While that has to change, it doesn’t alter the fact that PLTR stock is in the buy zone. 

In December, I said it would be wise to buy shares if they fell between $17.06 and $15. PLTR has arrived at this level. So, the time to buy is here.  

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. 


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