Palantir Technologies Inc. (PLTR) teams up with the intelligence community to deploy software platforms that aid in counterterrorism investigations and endeavors. Their products include Palantir Gotham, a distinctive platform designed to decipher patterns within extensive datasets.

The company is benefitting from the Artificial Intelligence (AI) boom. This year, the company launched its Artificial Intelligence Platform (AIP), which allows large language models to operate within the confines of the enterprise and on privately held data.

CEO Alexander Karp, in a letter addressed to shareholders, announced that AIP already has users across more than 100 organizations. He also revealed that PLTR is in talks with 300 additional enterprises to deploy AIP.

Notwithstanding these developments, there are some concerns surrounding PLTR’s financial valuation, which appears overly inflated. In terms of forward EV/Sales, PLTR is trading at 13.01x, 368.3% higher than the industry average of 2.78x. Its forward Price/Sales multiple of 14.26 is 435% higher than the 2.67x industry average.

Taking into consideration these factors, it might be prudent to review the trends of PLTR’s key financial metrics to understand why it could be wise to wait for a better entry point in the stock.

Analyzing Palantir Technologies’ Financial Health: A Comprehensive Look into PLTR’s Performance Metrics from 2020 to 2023

The trailing-12-month revenue trend of the PLTR exhibits a general increase with minor fluctuations from December 2020 through June 2023.

• By the end of December 2020, PLTR generated $1.09 billion in revenue.
• Six months later, by June 2021, revenue increased to $1.33 billion.
• At the close of September 2021, revenue slightly rose to $1.43 billion.
• Reaching the end of 2021, revenue reached $1.54 billion in December.
• March 2022 saw a further escalation of the company’s revenue to approximately $1.65 billion.
• June of the same year witnessed a moderate climb in revenue to nearly $1.74 billion.
• In September 2022, revenue continued upward, reaching $1.83 billion.
• By the end of 2022, revenue rose to $1.91 billion in December.
• At the close of March 2023, revenue augmented to almost $1.98 billion.
• The last stated value in the series reveals that by June 2023, PLTR’s revenue increased to approximately $2.045 billion.

From the first to the last value in the series, there is an evident growth rate in revenue. Over this period, PLTR went from $1.09 billion in December 2020 to about $2.045 billion by June 2023, which suggests a significant increase in the company’s revenues. This progression indicates a robust and growing performance by PLTR over time.

The gross margin of PLTR shows a generally increasing trend from December 2020 through June 2023 based on the data series provided. Here are the key data points:

• On December 31, 2020, PLTR had a gross margin of 67.7%.
• By June 30, 2021, that figure had increased to 71%.
• Another increase was observed on September 30, 2021, when the gross margin was reported as 77.5%.
• The gross margin grew steadily until June 30, 2022, reaching 78.7%.
• After June 2022, the growth rate seemed to plateau, fluctuating marginally around 78.6% to 78.7% until the end of March 2023.
• The most recent reporting on June 30, 2023, indicates an uptick in gross margin to 79.1%.

Significantly, the growth rate from December 2020 until June 2023 is approximately 17%. This implies a steady improvement in PLTR’s gross margin over this period, highlighting a positive trend with some fluctuations, mainly between mid-2022 and early 2023.

According to the data provided, the current ratio of PLTR has demonstrated a generally increasing trend from September 2020 to June 2023. The specifics of the trend and fluctuations are summarized below:

• Starting at a current ratio of 2.54 in September 2020, PLTR showed significant growth to reach a value of 3.74 by December 2020.
• In the first quarter of 2021 (March 2021), there was a slight increase, lifting the ratio to 3.88.
• This upward trajectory continued steadily until September 2022, reaching a ratio of 4.28, although a minor drop was noted in June 2022 (4.36 from 4.38 in March 2022).
• There was a notable spike by the end of December 2022, with the current ratio surging to 5.17.
• The first quarter of 2023 saw a further increase to reach a peak of 5.41, but this declined slightly to 5.22 by June 2023.

When considering the growth rate from the first record in September 2020 (2.54) to the last in June 2023 (5.22), an impressive overall growth of approximately 2.68 (106% increase) is observed.

The current ratio for PLTR over nearly three years suggests a healthy ability to cover their short-term liabilities with short-term assets, presumably improving the company’s financial strength.

The data indicates that the Analyst Price Target (APT) for PLTR has experienced several fluctuations and an overall downward trend from November 2021 to August 2023. Here are specific observations of this trend:

• As of November 12, 2021, the APT stood at $25.
• This value dropped to $23 by November 19 and remained steady for several weeks, right through January 7, 2022.
• From January 21, 2022, through April 2022, there were notable fluctuations in the target price, with a gradual but consistent decline to reach $16 by mid-April.
• The APT dipped considerably to a low of $11 by May 20, 2022, where it was sustained until the end of September.
• A sharper decline was seen in October and November, with the APT hitting a low point of $10 by November 4, 2022, and remained there for the rest of the year.
• Starting the new year, the price target fell even lower, to $8 by February 10, 2023, which continued to stay constant for a long period through to June 2023.
• A small uptick is seen in July and August 2023, with the APT peaking at $12.5 by August 18.

In terms of growth rate, comparing the first value of $25 from November 2021 to the last value of $12.5 on August 23, 2023, this data set shows a negative growth rate of -50% over that time period.

However, it’s crucial to note that the fluctuations in between, particularly the trends of sharp declines, periods of stability, and small spikes, should be considered for a more detailed and context-sensitive analysis.

Examining Palantir Technologies’ Share Price Fluctuations and Growth Trend: February-August 2023

The data shows that the share price of PLTR has fluctuated from February 2023 to August 2023, with a clear trend of overall growth despite periods of decline. Here is a summary of the data:

• On February 24, 2023, the share price was $8.05.
• The following month saw some fluctuations, ending with $8.176 on March 31, 2023.
• In April 2023, there was an overall increase, peaking at $8.534 on April 21, 2023, before dropping to $7.848 by April 28, 2023.
• May 2023 showed a significant increase, with the value rising from $7.532 on May 5, 2023, to $12.652 on May 26, 2023. This indicates a high growth within the month.
• In June 2023, the price continued to climb, reaching a peak of $16.004 on June 16, 2023. However, it dropped slightly to $14.876 by the end of the month.
• July 2023 observed an increasing trend with a peak price of $17.48 on July 21, 2023, but closed the month at $16.666 on July 28, 2023.
• In August 2023, the share price experienced considerable volatility. It reached its highest point for the period at $19.084 on August 4, 2023, then decreased significantly to $14.67 by August 22, 2023.

Observing the periodic growth rates and considering the highs and lows, the data shows a deceleration in the rate of growth towards the end of the period. This deceleration is illustrated by the sharp drop from August 4, 2023, to August 22, 2023. Here is a chart of PLTR’s price over the past 180 days.

Assessing PLTR’s Ratings through Growth, Quality, and Momentum Metrics

PLTR’s latest POWR Ratings grade is C (Neutral). The POWR Grade is a proprietary rating system that considers various metrics to grade stocks. PLTR, which belongs to the Software – SAAS category of stocks consisting of 24 total stocks, has shown varying ranks within its category over time.

Here are key points showing PLTR’s POWR Grade and its ranking among the Software – SAAS category stocks from February to August 2023:

• As of February 2023, PLTR held a C (Neutral) POWR Grade and was ranked #12 in its category.
• In March 2023, it maintained this C (Neutral) grade, but its rank fluctuated between #12 and #15.
• Throughout April and May 2023, the grade remained unchanged, and the rank mostly stayed within the range of #14 to #17.
• In June and July 2023, PLTR’s rank worsened to maintain around the #20 spot.
• However, as of August 19, 2023, there was an improvement as PLTR climbed to #16 place, yet it slipped to the #18 place as of August 23, 2023, while continually maintaining its C (Neutral) grade.

By focusing on lower rank-in-category values being better, PLTR’s performance appears to have dampened slightly over this period under discussion. Though the POWR grade remained constant at C, the rank-in-category drop suggests that compared to its peers, PLTR’s relative position has somewhat worsened.

From your provided data, it is clear that the dimensions of Growth, Quality, and Momentum consistently show the highest ratings for PLTR.

Growth:

The Growth dimension, which measures the degree of establishment and expansion of PLTR, has been consistently high. Here are some noteworthy points:

• In February 2023, the growth rating was 94.
• There was a small increment in March 2023, bringing the value to 95.
• However, from April 2023 onward, there was a slight, steady decrease in the growth rating, with values of 94, 93, 91, 90, and finally 89 recorded in August 2023.

Quality:

With respect to Quality, which assesses the profitability and solvency of the asset:

• The asset started with a quality rating of 86 in February 2023, which remained consistent until April 2023.
• From May 2023 to July 2023, there was a slight, steady decrease, with ratings going from 85 to 83.
• Interestingly, the quality rating shoots back up to 86 in August 2023.

Momentum:

The Momentum rating offers insights into the recent performance trends associated with PLTR:

• Beginning at a value of 44 in February 2023, there was a steady progressive increase to 50 in March, 53 in April, and 51 in May 2023.
• However, Momentum seemed to slow down after May, with gradual decreases seen with values of 48 in June, 46 in July, and 45 recorded in August 2023.

These three dimensions serve to provide the most comprehensive assessment of PLTR rates during the indicated period, with notable variations observed that might have implications for future ratings.

How does Palantir Technologies Inc. (PLTR) Stack Up Against its Peers?

Other stocks in the Software – SAAS sector that may be worth considering are MiX Telematics Limited (MIXT), Informatica Inc. (INFA), and New Relic, Inc. (NEWR) – they have better POWR Ratings.

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PLTR shares were trading at $15.41 per share on Wednesday afternoon, up $0.74 (+5.04%). Year-to-date, PLTR has gained 140.03%, versus a 16.75% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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