Palantir’s Long-Term Bull Case Looks Compelling

Palantir (NYSE:PLTR) stock took a beating last year. PLTR stock is down more than 67% from its 52-week high price, currently sitting at $14.56. The signs of deceleration in the company’s public-sector business have been a key reason for the sluggishness. However, the positive developments in the past few months reiterate my belief in the company’s long-term bull case.

A close-up shot of a hand on a screen with the Palantir (PLTR) logo.

Source: Ascannio / Shutterstock.com

PLTR stock more than tripled in value within the few months of its debut at the stock market. However, it lost most of those gains during the February tech stock selloff in 2021 and hasn’t yet recovered. Recent headwinds ranging from the new Covid-19 variants to the rising inflation have further weakened the stock.

Palantir’s commercial segment has been growing at a rapid clip of late, with a whole host of opportunities ahead. Moreover, the recent rebound in the public-sector business points to the effectiveness of the company’s software solutions. Hence, PLTR stock’s recent performance doesn’t reflect the robustness of the underlying business.

Robust Demand Across Segments

Despite the headwinds, Palantir continues to deliver with its incredible software offerings. The commercial segment, in particular, has been quite the revelation in the past few quarters. The segment has grown almost 30% from the prior-year period during the first nine months of the year, generating upwards of $450 million in sales.

Palantir has signed agreements with several reputable names during recent quarters, including Merck (NYSE:MRK), Kinder Morgan (NYSE:KMI), Dew Point Therapeutics, and others. The company’s flagship Foundry software allows companies to improve decision-making by breaking down data silos significantly. The demand for the software will only grow as more companies understand the relevance of leveraging data.

Nevertheless, the slowdowns in its government segment sales during the third quarter have hampered its outlook. Growth in the segment came in at 34% on a year-over-year basis during the third quarter. The three preceding quarters generated around 70% growth from the segment. However, the company’s latest contract wins during the last quarter point to a brighter future ahead.

Some institutions that have inked an agreement with Palantir include the Army Vantage Program, Space System Command, and the National Institutes of Health (NIH). The recent wins show that the company has the technological capacity to process vast amounts of data without compromising on efficiency.

Expansion Into The Crypto Space

Palantir will be foraying into the cryptocurrency market with its robust Foundry software. The software will provide solutions for identity and fraud theft and can be used by fintech, financial institutions, cryptocurrency exchanges, and startups looking to expand their exposure in the crypto space.

In 2021, $14 billion were stolen from various digital wallets. That number can rise in the coming years as the adoption of crypto rises. Crypto brokerages and exchanges must maintain their reputation; otherwise, it can result in severe financial consequences. Moreover, its links with the government give it a major edge. It has been working with several different U.S. agencies since the outset and has acquired various data contracts. Hence, with such vast experience in the sector, it is safe to assume that Palantir could get a sizeable chunk of the crypto market.

Bottom Line on PLTR Stock

PLTR stock has lost a fair share of its value in the past few months. Investors have gotten overly skeptical about its prospects after a slowdown in government revenues.

However, its solid showing during the last quarter indicates that most investors have gotten ahead of themselves. The scalability of Palantir’s products is such that it can handle complex data challenges. The company is in an incredible place to capitalize on the massive growth opportunities ahead.

On the date of publication, Muslim Farooque 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


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