Have you ever heard of predictive policing?
The hit TV show Person of Interest is the perfect visual documentation of how this concept works. In simple terms, predictive policing is using historical data to forecast criminal activity.
Let’s pan away from the TV screens to reality. The police department in New Orleans, Louisiana, has experimented with an algorithm to predict places and times with a high crime risk.
Now, how does this concern you as an investor? Enter Palantir Technologies.
This article will give you a bird’s eye view of the company and teach you how to buy Palantir stock. It will also establish the connection between Palantir and predictive policing.
About the Company
Palantir is a Big Data Analytics firm based in Denver, Colorado. It was founded in 2003 by PayPal co-founder Peter Thiel alongside Alex Karp, Joe Lonsdale, Nathan Gettings, and Stephen Cohen.
Interestingly, the company’s name is inspired by J.R.R. Tolkien’s Lord of The Rings books. In the trilogy, also adapted into films, Palantíri were magical, seeing stones used to communicate and see events in other parts of the world.
Palantir specializes in the deep analysis of financial, criminal, communication, medical and intelligence data. It offers technological solutions ideal for tracking terrorists. The company has also not shied away from embracing rumors that its tech played a part in locating Al-Qaeda leader Osama bin Laden.
The company was formed not so long after the 9/11 attacks with funding from Q-Tel, the investment wing of the Central Intelligence Agency (CIA). The funding allowed the company to develop its first major product — Gotham — launched in 2008. The product has helped American security agencies with surveillance and warfare.
Palantir’s business is split into three main products:
Palantir Gotham is an Artificial Intelligence (AI) data analytics tool used by counter-terrorism analysts in the United States Intelligence Community and the Department of Defense (DOD).
Palantir Foundry is an enterprise data management platform that simplifies big data. Itis used by corporate clients such as Fiat Chrysler, Morgan Stanley, Airbus, and Lilium.
And Palantir Apollo is a continuous delivery system that deploys and manages Gotham and Foundry. Apollo was birthed out of a demand from customers who wanted to use several public and private cloud systems as part of their infrastructure.
The big data analytics company went public in September 2020. This was done via a direct listing on the New York Stock Exchange (NYSE). Palantir’s direct listing allowed its existing shareholders to dispose of up to 20% of their stake to new investors.
Complaints from current and former employees stained Palantir’s public offering. The two groups lamented the lack of access to the system to sell their shares. This is significant because Palantir dangles employee stock options instead of paying very high salaries. The situation forced the company to slash its stock price in 2019 ahead of the public listing to motivate employees disillusioned by transactions with diminishing returns.
When issuing its Initial Public Offer (IPO), Palantir was the most exciting tech stock since Uber. It was also one of the biggest unicorn floats since the ride-hailing company.
The NYSE set Palantir’s stock reference price at $7.25 a share. On PLTR’s IPO date, the shares opened at $10 and closed at $9.50.
PLTR’s NYSE listing gave the company a market capitalization of $16.5 billion. This was based on 1.65 billion shares outstanding.
And as of February 18, 2022, Palantir’s market cap was $23.59 billion.
Should You Buy Palantir Stock?
Like any other stock, an accurate prediction of Palantir is impossible. However, familiarizing yourself with the factors that affect its performance will give you a competitive advantage. This will help you recognize the appropriate times to buy PLTR stock, sell or hold your position.
The first step you should undertake before you invest in Palantir is to go over its business history. It would help if you also examined the company’s current standing, the health of its balance sheet, as well as its plans.
Here are some points to consider:
- Since its inception, the PLTR ticker has never booked any profits but has recorded revenue growth in every quarter since 2019.
- Some of the milestones achieved by the company include launching software for the digital cryptocurrency market.
- Since the second quarter of 2021, the company has strategically invested in startups. Palantir is betting on SPACs — Special Purpose Acquisition Companies — as a long-term plan to diversify its revenues. SPACs that secure Palantir investment commit to buying its software once they grow. For instance, Celularity, an early-stage biotech company, has an obligation to purchase Palantir software after raising $20 million from the big data company.
- In January 2022, Palantir announced plans to expand to South Korea through collaboration with Hyundai Heavy Industries. Under the cooperation, Palantir will build Big Data architecture for Hyundai businesses.
- Palantir is heavily dependent on government contracts. More than 50% of its total revenues — come from the company’s dalliance with authorities. In October 2021, for instance, Palantir secured a contract worth a whopping $823 million to provide data and analytics software to the US army. Palantir has also secretly provided the New Orleans Police Department with crime predicting software.
2021 Financial Highlights
In the full year ended December 2021, Palantir reported a 41% increase in total revenues from $1.1 billion to $1.54 billion. During this period, US revenue grew by 53% YoY to $879 million.
The FY results also realized Chief Executive Alex Karp’s promise to grow the company’s commercial revenue, which jumped 34% to $645 million. The fourth quarter recorded the biggest increase – 102% year over year. The company’s customer count also tripled to 147.
Wall Street remains critical of Palantir over the company’s overdependence on government contracts. This is one of the reasons why Palantir hopes to post a 30% growth in annual revenues from 2021 through to 2025.
Speaking of government revenue, the stream jumped 47% in 2021, reaching $897 million.
Despite the positives, Palantir still booked $411 million in operational losses. The net loss for the year stood at $520.4 million.
Palantir Stock Performance
Palantir’s stock was assured following the company’s listing in September 2020 due to widespread media coverage and new interest.
The company also briefly benefitted from the meme stock rally in early 2021. The Reddit-fuelled momentum sent its ticker 250% above the price recorded on the PLTR stock IPO date. However, Palantir performed poorly for the rest of 2021 as investors got more insight into the company’s business.
As of February 15, 2022, Palantir’s stock value stood 70% below its 2021 high.
Palantir’s p/e ratio as of February 17, 2022, was 73.53. This indicated investors remained bullish over the company’s long-term potential.
PLTR after-hours volumes stood at 1,417,828 on Feb 17, 2022. On the same date, the company’s after-hours high stood at $12.26, while the after-hours low was $11.75.
Analysts offering a 12 month Palantir stock forecast in February 2022 put the company’s stock at:
- High – $16
- Median – $15
- Low – $9
Experts recommend holding around 20-30 stocks in your portfolio. The rationale is for each of them to play a strategic role in protecting your investment and securing good returns. Ideally, no company should constitute more than 5% of your basket. Ten percent is the ceiling.
Analysts argue that Palantir is not suitable for short-term investors but could turn out to be a solid long-term investment. However, it is always best to do your homework to gauge Palantir’s suitability for your portfolio.
The research should also fill you in on how to buy Palantir stock and the latest about the company. Additionally, it should show how Palantir competes against its industry peers.
So make sure the addition of PLTR stock contributes to a well-balanced, diversified portfolio.
How to Buy Palantir Stock
Once you decide to buy Palantir shares, you need to settle on the preferred trading medium.
Palantir doesn’t offer a direct stock purchase plan. You can only acquire its stock through a broker. The most convenient way for trading stocks is through online stockbrokers.
You can also opt to go with a financial advisor to guide you through the process or buy and sell shares on your behalf.
The first step when looking to buy Palantir stocks via an online trading platform is finding one that syncs with your needs and financial plans.
If you’re not thorough, you might incur expenses that can easily be avoided. Such expenses include trading commissions. It is of utmost importance to find the right fit. For instance, PLTR trading on Robinhood is commission-free .
Taxes can also be a headache if not taken care of. It’s also prudent to avoid staking money you’re unwilling to lose.
Do your research. Check the PLTR stock outlook and assess all other metrics carefully. Once you are confident enough, choose the Palantir ticker and execute the trade.
Tapping the services of a financial advisor is a good move and can help you make sound investment decisions.
For instance, if you’re unsure how many Palantir shares you wish to buy or how much to invest, then a financial advisor will help you navigate the market.
Most financial advisors charge a retainer (flat fee) that can add up to $7,500 annually. The cost of opening an account with a professional ranges between $2,500 and $3,500. Another $3,000 to $3,500 is then accrued for the rest of the year.
The million-dollar question regarding Palantir as a company is whether it can diversify its revenue and cut the overreliance on government contracts.
Regardless, the company has gone against the grain to net new business amid geopolitical and economic uncertainty.
Long-term Palantir investors are in line to gain as the company’s growth outlook looks strong.
However, it’s vital for investors to pick the right moments to place an order. This will determine whether they achieve their financial goals or not.
It depends on your financial objectives. Analysts were, however, recommending “buy palantir stock” in February 2022 when the share price oscillated between $12.26 and $15.
The Palantir stock ticker read $14.17 a share on February 16, 2022.
Peter Thiel, Palantir’s co-founder, is the largest individual shareholder in the big data analytics company, with 6.9% of shares outstanding.
Chief Executive Alexander Karp owns 2.5% of the total shares outstanding.
The general public owns a 58% stake in Palantir. Public companies, on the other hand, own 5.9% of Palantir.
PLTR’s stock does not yield dividends.
Yes. The stock symbol for Palantir at the New York Stock Exchange (NYSE) is PLTR.
Palantir sells software to government agencies and corporate clients seeking to leverage data to make better decisions or solve complex problems.
There is no specific date when Palantir reports its earnings. The company fixes a date and communicates the same to investors through an official release.
However, the company reports its earnings before the opening of US markets.
For instance, on February 4, 2022, Palantir announced that the financial results for Q4 2021 would be released on February 17, 2022.
When such an announcement is made, it will inform your strategy on whether and how to buy Palantir stock.