저자: Daniel · 외국인
요약 보기
팔란티어 3분기 실적 발표 후 주가 약 20% 급등. 미국 상업부문 매출 33% 성장, 고객 수 증가, 잉여현금흐름 약 5억달러 등 긍정 지표 제시. 다만 주식보상 제외 시 수익률은 29%가 아닌 7%라고 지적. 신고가 회복 가능성은 있으나 현재 밸류에이션이 높아 8~15년 소요 추정으로 본인은 매력 낮다고 평가. 투자 권유 아님.
다듬은 글
Palantir recently released third- quarter results, sending shares up about 20%. Investors are asking: are we headed for new highs? So, for context: the shares used to peak around $45 a share, while today they are worth just under $20. So they're still below 50%, and the last few years have been tough.
However, since the company first entered the public market through a direct listing, the stock has risen by approximately 100%. But investors look at this and think, "Oh my God , the last few years have really been painful." But could this be the start of a new bull market that will propel the company to new heights, where you could potentially consider long-term ownership for many years, reaping attractive returns?
This is a key question that many investors ask themselves. So we'll talk about the outlook, the time frame for reaching new highs, and my current thoughts on Palantir and their recent results. If you like educational videos about investing, you watch Unrivaled Investing. My name is Daniel. Let's dive into the details to understand what's going on with Palantir.
I asked the AI Ticker Chat, which uses artificial intelligence and ChatGPT GPT-4. I said, "Let's look at their income statement." Let's ask why Palantir shares might rise on these results. The first month with AI Ticker Chat is free. He hits the target right on target. It says: the reason for the possible growth is that the rate of revenue growth is accelerating.
Their margins are increasing. This is their GAAP profitability, for the fourth consecutive quarter. They tell how their commercial business in the US has accelerated, growing by 33%. How their new approach to the market around the AI Platform Bootcamp proved successful. We'll talk about this in much more detail in a moment.
They also say they expect their business with the US government to accelerate. So, acceleration in all directions, lots of good news. Management is betting big on artificial intelligence, claiming—and you can see these promotional materials on their website—that Palantir is recognized as a leader in AI or machine learning platforms, that they are ranked number one in the world for AI software, or how they are a “ visionary” in Gartner’s “ Magic Quadrant” for data integration tools.
So, let's discuss that in a moment , but this is translating into strong core business growth: U.S. commercial segment revenue grew 33% year-over- year. This is a powerful turning point for this business. You can see that their customer base has increased by almost 40% compared to last year. The number of their commercial customers in the US has increased 10-fold in the last 3 years.
So, these investments in using AI to work with the commercial customer base in the US are certainly starting to pay off with this accelerated growth and a tenfold increase in the number of customers. So this is very favorable. Now, you know, I have to take issue with what they're doing when they say, "Hey, look at our 29% return." The problem is that this 29% return is largely driven by stock rewards.
Therefore, if you exclude these stock awards, it is no longer 29%. In fact, it is 7%. I think if management had just said, " You know what, we should have had this mentality when we were a startup." We are no longer a startup. Now we are big players. So we will no longer provide you with these fake and fabricated adjusted figures .
We're actually just going to show you the actual return numbers without adjusting for stock awards. I'm sure if they did that, the stock would go up a few percent overnight, just because of the recognition that these are real costs, because you're diluting shareholder equity by saying, " Hey, we want to be taken seriously." Therefore, I believe that once management takes this step, the shares will increase in price somewhat, because right now they reflect that the company is still behaving like a " kindergarten" in terms of accounting for stock-based compensation.
Thinking about their profitability, but yeah, look, 7%—that's still better than negative, and they're showing real profitability. You know, looking at GAAP operating income, it's now about $40 million plus favorable operating income and plus favorable interest income. So, given the cash balance, they are also generating near-record free cash flow of about $500 million .
This is very important because even though a significant portion of this comes from stock awards, it really means that they can determine their own destiny when they have their own free cash flow. You don't need to turn to capital markets to raise funds. You can say, " Hey, we're going to self- finance our development in the future, and we're going to, you know, self-finance." We're going to direct our cash flow into investing in projects and businesses that we think are worthwhile, and we don't necessarily have to worry if Wall Street is unhappy today, because it doesn't matter because we have free cash flow.
If there is a war somewhere in the world , if there are problems, we are safe because we have free cash flow and we can decide for ourselves where to invest it. This also gives them the option to repurchase shares in the future if they deem it prudent . At the current level, I do n't think it's appropriate.
They also raised their forecast for the year. And that's also one of the reasons why the stock has risen, given expected profitability and targeted revenue growth of around the mid- to high-tenths percent this year. So the question is, are these new highs? Is this a new bull market for Palantir? Where is he heading next?
First of all, for complete transparency: this is not financial advice. Also a little advertising. Manage your investment journey with unrivaledinvesting.com. An inexpensive weekly newsletter that helps you find potential " multibaggers"—stocks that can increase by hundreds or even thousands of percent over time.
So, once again, this is on the website unrivaledinvesting.com. There are also some educational materials there. So, thinking about Palantir, what lies ahead for the company? It is important to understand that currently the public sector still provides the majority of revenue. You can see that in the last quarter, state revenue was 308 million, while commercial revenue was 250 million.
However, the commercial sector is growing faster. So at some point, maybe as early as next year, that will change and Palantir will become a predominantly commercial business . This means that it will become more sensitive to the economic cycle compared to government budgets . Nevertheless, it is very clearly visible.
Palantir is strong about its values, and it's absolutely clear that their government business isn't going anywhere, and they expect it to grow over time. Now, reflecting on their commercial endeavors, how they invest and in what, and their expected growth, one of the key areas they talked about many times during the call is AIP—the artificial intelligence platform.
How to think about it —it's a little complicated. And it's worth discussing it here because I want you to think about it too. So you have the creators of these big language models, the creators of these artificial intelligence models, like Facebook, like OpenAI, like Google, you're going to see a lot of different models that are going to be distributed.
Currently, OpenAI has the most advanced technologies. They recently released Turbo GPT-4. And we use GPT-4 with our AI ticker to help with stock research. The question is, where is the value concentrated? How to divide this economic pie? How much should an artificial intelligence developer get, and how much should someone who says, "We'll help you integrate it" get?
We will help sell it to all these customers. This is especially challenging because OpenAI claims they are making it easy to create your own GPTs using your data. This is one of the key benefits that Palantir talks about: not worrying about the data going to Microsoft or anyone else. We will help maintain confidentiality so that no one can learn from your data, and you can create your own models.
Therefore, I wonder how realistic it is to maintain this " secret advantage" of the integrator, given that competition will increase. You will also see many companies offering integration tools. I believe Palantir will continue to grow. But it's interesting how easy it is to maintain this acceleration in such a dynamic market.
For example, with OpenAI's custom GPTs, which I experimented with yesterday , it's impressive because you don't need to know programming. Everything is done in natural language: you simply explain what you want to do with the data instead of writing code. I think this opens the door to a whole new world.
Still, Palantir has relationships with many clients and is making smart investments in helping them navigate the world of LLM models. So this is definitely a huge opportunity . The question is, will the benefits go to those who own the models or to those who, you know, help implement them? I believe that it's actually the one that helps you get into these niche examples , where, for example, it helps you evaluate stocks.
Let me give you an example right now, where, again, it's AI Ticker Chat; this is using chatgpt4. He says, "Hey, based on Palantir's results, it gives a baseline of what revenue growth could be over the next four to five years, what profits could be, " pointing to a margin of 15-25% and a final multiple in four to five years of 25-35.
And based on that base, on that growth, on that profit margin, and on that bottom line, that's actually a pretty unattractive return for Palantir. Personally, I assume that margins could be higher than, say, 15% and growth higher than 11%, so I would probably reject this pessimistic scenario for the next few years.
But I really think you're starting to get into the situation of, "Okay, what's already built into the price?" because it's a $44 billion company. So I wanted to do a slightly different analysis. I usually do analysis similar to what I just showed with AI Ticker Chat, showing the structure of where stocks are going.
And AI Ticker Chat now covers almost all US companies with a market capitalization of over $300 million. And we will add a new OpenAI turbo chatgpt4 model, which will be released into production soon. But I wanted to show what it takes for Palantir to reach a new high. You know, let's say the price goes back to $45 a share.
What is needed for this? Since there are currently about 2.3 billion shares outstanding. So, to get a really strong return, $45 per share means that the market capitalization at that point, when it returns to the new high, would be about $ 105 billion. So, $105 billion compared to where they are today.
Let's assume that in that future period, I don't know how many years will pass, and we go through that scenario, how many years will it take to reach a new high. Let's say that the final ratio in that period is equal to 30 times the profit. So, $104 billion at a multiple of 30 means Palantir should be making $3.5 billion in profit, considering their margin is only about 7%.
Now let's assume that in the future they will reach a rate of 20% to 25%. This means that at some point in the future they need to have approximately $14–17 billion in revenue. They are now forecasting two billion dollars in revenue this year. So, assuming growth rates of 15 % to 25%, how do we reach these 14–17 billion?
It will take 8 to 15 years to reach a scenario where, at a multiple of 30 and a profit margin of 20% or 25%, Palantir shares will eventually return to $45 per share. This is a situation that does not appeal to me at all, when they say: "it will take 8–15 years for a stock to maybe double, well, a little more than double." I think this reflects the fact that the price of Palantir is very high, and I personally believe that there are better bargains out there, and I tell my subscribers on Unrivaled Investing about what I buy personally.
If I plan something for the next 10 years, it should provide at least 300–500% return. If I think about this structure: where will the company be in 10–15 years? So this is purely my personal opinion. I encourage you to look at this and think: do you disagree with these calculations or with this structure?
I'm not even including taxes here. So it's a bit optimistic to assume that their 20% operating margin is actually their net margin after taxes, which they are still a long way from now . I'd love to hear your feedback in the comments below if you think they will grow faster than I predict. Let's say growth is faster than 20–25% per year, or you think their profit margin will be significantly higher than my estimate.
So feel free to leave comments below. I will definitely read them and respond. Thank you for watching Unrivaled Investing.
Comments 0