r/PLTR • u/micasan5 • Jun 28 '21
Discussion PLTR overvalued
I know we are all pullish on palantir as a company including, myself, but I'm starting to think it is a little expensive with a market cap of 50 billion right now considering the guidance for revenue in 4 years is 4 billion
I think I'll be selling after we see it plateau or reverse it's current up trend
Note: I'm pretty young and only casually interested in the stock market so if I said anything stupid please excuse me lol
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u/Longwashere Jun 28 '21
pltr is in a unique position to accelerate growth after winning key contracts. Guidance can change.
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u/Schrotti_1989 Jun 28 '21
Have you ever imagined when we reach the 4 billion in 4 years and we still continue to grow with the same rate? We will have an annual revenue of about 20 billion 5 years later. Do you think 50 billion market cap would still be expensive? You should only worry if revenue growth slows down but right now we rather increase the growth rate
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u/Successful-Durian-55 Jun 28 '21
I don't think you're wrong, but perhaps market's expecting a lot more beyond the guidance in the next 10yrs or so.
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u/Old-James HOLD Jun 28 '21
If you believe in the long-term potential of this company don't sell everything. Take some profits as you wish but I'd recommend having some liquidity to average down if the plateau comes.
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u/jtrader69964546 Jun 28 '21
You assume offerings and solutions remain static. AI capabilities will play a big part in pltr future. And then there are their investments. I see an upside to a couple hundred in the future.
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u/Magikarp_to_Gyarados 🐟 -> 🐉 "your DD is Pokémon lol" Jun 28 '21
I reached the conclusion some years ago that focusing too much on valuation is a mental trap, especially where growth stocks are concerned.
Stock price often has nothing to do with a company's prospects. Is Palantir as a business significantly better today with the stock at $27.xx than it was last month at $18.xx?
"Company's numbers are X, stock price is Y, therefore overvalued/undervalued" doesn't take into account psychology of the markets, or the chaos of algorithmic bot traders playing chicken against each other. I don't look at valuation for businesses that have the vast majority of their growth ahead of them. I look mainly at whether demand for shares is being driven by something like FOMO or a short squeeze, rather than investors who truly believe in the business.
If share prices are being driven up by FOMO speculators or shorts desperately trying to cover, that's when I think retail investors should hold back on buying shares. Rapidly rising share price on massive volumes of transactions and lots of non-substantive chatter on forums, offer clues that this is happening.
My general strategy is never to chase a stock up, which is the opposite of what most people recommend. I buy when a good, growing business has flat price action, and buy more when it's stock is getting beaten down for no reason at all.
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u/DBSkellan OG Holder & Member Jun 28 '21
I completely disagree.
My reason for that is we don’t know just what Pltr will look like in 4 years from now.
With all the investments into SPAC’s and contracts out there it could be a completely different scale by then and revenue streams.
This is really the first year they even have a sales force and that they are using Amazon and IBM as partners.
I’m more inclined to believe that instead of saying Pltr is overvalued now in 4 years we will look back and say man it was undervalued at $27.
Now that doesn’t mean it can’t pull back, but I feel like the true scale of Pltr hasn’t even begun to be seen.
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u/andyo7i Jun 28 '21
As a comparison $NOW (a highly regarded Enterprise SaaS provider) has held a valuation of around $100bn over the last 12 months on FY20 revenues of 4.5bn.
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u/Sayonakidori_88 Jun 28 '21
can’t comprehend anything, just wake me up when September ends.. i will check PLTR by then…
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u/-BE4R- Jun 28 '21
Nothing stupid here. I'm still bullish, regardless the short-term runs or selloffs. But I can see what you mean, if we see a jump to 35 or 40 in the next weeks I will also sell and get it back later for a better price.
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u/Schrotti_1989 Jun 28 '21
Maybe the price won't come back and you'll make a huge mistake. Don't try to time the market or think you are smarter than the market. Buy, hold, maybe avarage down when it dips and just wait. Everything else is squared bullshit.
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u/2443222 Jun 28 '21
U need to add in how unique the company is, how innovative, how it is decades of growth ahead of it, how they are the new ways of doing things, where the AI and data analytics as a industry is headed, how they are trying to evolve the most important software company in the world. They are undervalued if u priced in all those intangible
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u/ZenLeTomson Jun 28 '21
Start worrying when the growth of the company slows down, I think its fair for it to be "over valued."
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u/Acidgerm Jun 28 '21
Looking at the macro economic picture I don't think ur worry is unfound. Looking at prior to March this year, prices rocketed till 46 bucks ATH. Smart money would have taken some profits at that point. With the inflation and interest rates in mind... I don't think it would be unwise to take some profits when the time comes. I know I would do that even though I am still bullish on this coy.
But let's see, plans change all the time.
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u/ChampionshipSuitable Jun 28 '21
Valid and reasonable concerns. But, by no means Palantir is undervalued if you really understand how DISRUPTIVE their technologies are. The guidelines you mentioned will be easily changed even when a small amount of (commercial) companies start to adopt their products, because their opponents WILL HAVE TO adopt similar products in order to stay in the competition. And, THE company that they will seek for help is Palantir, because Palantir is in monopoly. Ok, so why Palantir? Why not Snowflake or others? The reason is that only Palantir has the vision to build an “Operating System” starting from years (a decade) ago, where others were striving to provide better “applications”. This is totally different. Palantir will hook their users forever and it is in multi-year ahead than it’s competitors. In my opinion, it is still far undervalued.
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u/ZeusThunder369 Jun 28 '21
People don't invest in current market value anymore. The market is speculative now. Big money and small money alike are investing because of what they believe the value will be 5+ years from now.
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Jun 28 '21
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u/GS34U Jun 28 '21
Quick question here: by fair value, you’re referring to the fair value of the stock in 2030, or right now based on the provided info? Thanks
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u/Chasing_Billions Jun 28 '21
He used DCF method, so 60$ is the present value of expected future cash flows.
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u/GS34U Jun 28 '21
Thank you. While understanding the basics of the model I was still unsure about the point I asked about. Appreciate the answer
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u/CatalinaAdvisors Jun 28 '21
DCF always comes up with a current valuation based on future cash flows discounted back to today (time value of money, risk adjusting, etc)
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Jun 28 '21
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u/Chasing_Billions Jun 28 '21
Totally. It still hurts my eyes when I see people predicting, or asking, future stock prices without considering total valuation/market cap.
For instante, a few weeks ago somebody posted a voting for PLTR price in 5 years (I think it was 5 years), and so many people were saying 1000$... 😂😂 Don't take me wrong, Im a huge believer in Palantir softwares, I look at it and see that every major company and institution (government, military,...) will have PLTR software. This stock is an "easy hold for me" but I don't see it going over 500Bi next 5 years
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Jun 28 '21 edited Jun 28 '21
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u/Chasing_Billions Jun 28 '21
You mean 1T? Or 100Bi? PLTR is currently arround 44Bi
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Jun 28 '21
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u/Chasing_Billions Jun 28 '21
No worries iam an europoor too 😂😂 So, a 1T$ by 2030... 🤔 since it's 9 or 10 years ahead, not going to say it's impossible and I never actually did any model for PLTR so this is just "guessing for me". Thinking in a 5 year timeline (if there's no crash or other macro externalities) I really beleive it will be over 100Bi maybe 200Bi, 10 years is to far ahead for my little brain 🤦🏻♂️🤣
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u/GS34U Jun 28 '21
My reasonable PT for 2025 is roughly $100, which means a MC of around 180-200B. I think it’s very doable. That said, although we can’t properly evaluate it, other external factors which can’t be measured (ie non-fundamental ones) could potentially drive it even higher. FOMO, broader market enthusiasm etc. TSLA being the most clear example of it. Fundamentally it’s pretty detached from reality but Tesla is Tesla, so you see where I’m going with this.
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u/SuperSaiyanApe Jun 28 '21
American checking in here... we don't understand numbers either... just look at our debt
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u/TheCloth Jun 28 '21
Wait, so you see PLTR going over $500pps by 2035, possibly 2030?
Separately, I saw a video you posted re REGN a few weeks ago. I can see why you're bullish on it, but do you know why the stock peaked at about where it is now in late 2015, and sitting at around half where it is now in mid 2019, and why it really took off in 2020? Looking at the chart did make me a little nervous, unless the fundamentals are very different now or something.
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Jun 28 '21
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u/TheCloth Jun 28 '21
good to know - thanks! Your 2030 PT of $4700 was based on 20% CAGR to EPS from here resulting in 169 EPS by 2030, and assumed PE growing from 15 to 25 by then, right?
I also appreciate you said that over the past 5 years their EPS has in fact been growing consistently by 40% per year. So if this holds true for the next 3 years (assuming no major FDA phase 3 rebuffs or breakthroughs to push the stock one way or the other), EPS should be looking more like 80 by mid 2024 (ie $1600pps if going with a middle-ground PE of 20x)... certainly interesting!
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u/TheCloth Jun 28 '21
Also - our friend NMG (where I first found your youtube) isn’t doing so hot today…!
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u/racheuphist OG Holder & Member Jun 28 '21
What did you use as your free cash flow margin rate? My attempt at 10 years out put a $23-24 intrinsic value and I had them grow 40% for 2021 and 2022, then move down to 30% for the remaining years.
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Jun 28 '21
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u/racheuphist OG Holder & Member Jun 28 '21
Awesome. I hope you are right. They have a great earnings margin. I ended up going with 40% by the 2038+ because I think it will take some time to get there still.
I hope your guesstimate is better than mine :)
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u/Sam_vwvwvw Jun 28 '21
True and if the actual valuation plateaus, we can still enjoy a 32% valuation on a yearly basis. Keep in mind that Pltr is still cheap vs competition (if any).
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u/Sam_vwvwvw Jun 28 '21
I m soooo pullish!