Palantir Stock Review

Palantir Stock Review
Is Palantir stock a buy? 
In this Palantir stock review video, I talk about the latest earnings report in May as well as break down the 4 Ms. 
Time Codes 
  • 0:00 – Intro
  • 00:25 – Palantir journey
  • 1:00 – Palantir News
  • 02:07 – EPS
  • 10:15 – Mos
  • 10:32 – Meaning
  • 11:27 – Palantir Competition
  • 15:07 – Moat
  • 15:25 – Management
  • 16:26 – Conclusion

Looking for more stock reviews? Check out our previous stock review.

  • Transcription
[00:00:00.370] – Sean

So what is going on with talent here? In this video, I’m going to talk about the latest earnings report, and then.

 

[00:00:05.650] – Sean

We’Ll jump into a 4Ms analysis. We’ll look at the margin of safety.

 

[00:00:08.830] – Sean

Within Tykr, and then we’ll look at the meaning mode and management.

 

[00:00:12.250] – Sean

And then I’ll talk about what I.

 

[00:00:13.660] – Sean

Plan on doing with the stock moving forward. Full disclosure on a long term investor in Pallandeer. Let’s dive in. So let’s quickly highlight the journey of this stock. So Palantir went public in September of 2020 at around $9 a share. A few months later, it went up to $35. And since then, it’s been on this slow decline ever since. And with the economy the way it is, especially with this bear market, especially tech stocks, Palantir has really not been a great performer. In fact, the latest earnings report caused it to go under $10.

 

[00:00:52.130] – Sean

I think today is somewhere around seven.

 

[00:00:54.780] – Sean

Point $80 or something like that.

 

[00:00:57.510] – Sean

But overall, let’s dive into what’s going.

 

[00:01:00.440] – Sean

On with the stock.

 

[00:01:01.210] – Sean

So we’re going to talk about the.

 

[00:01:02.050] – Sean

Good news in the earnings report and.

 

[00:01:03.700] – Sean

Then the bad news.

 

[00:01:04.600] – Sean

So good news is total revenue grew by 31%, which is great commercial revenue.

 

[00:01:11.510] – Sean

They have really two segments.

 

[00:01:12.900] – Sean

They focus on commercial, in other words, businesses and then government contracts. So with the commercial segment, they increase.

 

[00:01:20.950] – Sean

Revenue year over year by 54%.

 

[00:01:23.300] – Sean

Within the US, commercial revenue increased by 136%. That’s awesome. The issue is on the government side, it only increased by 16%, not nearly as high, but the customer count did increase by 86%. So let’s talk about the negative here.

 

[00:01:41.100] – Sean

With every earnings report that comes out.

 

[00:01:43.210] – Sean

That’S every quarter there are two numbers that analysts and institutions are looking at. Two key variables.

 

[00:01:51.030] – Sean

There are numerous others, but the two.

 

[00:01:52.400] – Sean

That stand out the most would be EPS and revenue. So in this case, revenue did beat expectations just by a little bit, like by point 64%. So it’s not huge, but it still beat expectations. But the miss was EPS was expected at came in at $0.02. So the stock went it was just north of $10 and it went under $10 a share. So let’s continue diving into some of the news here, especially with what others have to say. I’m going to kind of piggyback off a YouTuber. His name is Sasha Jenson. He had some really good comments on this latest earnings report, and a few of them align with a few I do not.

 

[00:02:38.740] – Sean

But let’s just start with the items.

 

[00:02:40.120] – Sean

I do not agree with.

 

[00:02:41.050] – Sean

So first off, he talked about there’s.

 

[00:02:43.350] – Sean

A negative sign that government revenue is declining. And I’m okay with that. The reason is when you look at government institutions and how many businesses there.

 

[00:02:53.530] – Sean

Are, there are not nearly as many.

 

[00:02:55.690] – Sean

Government institutions you can serve.

 

[00:02:57.370] – Sean

It’s just the logic makes sense.

 

[00:02:59.500] – Sean

There’s tons of enterprise businesses, big businesses, and there’s a lot of small and mid sized businesses, which Palantir hasn’t tapped.

 

[00:03:07.470] – Sean

In yet, but we’ll talk about that in a little bit.

 

[00:03:09.620] – Sean

But with the enterprise side, it’s an open field.

 

[00:03:13.260] – Sean

They can serve a lot more. So that’s where that growth opportunity sets. That’s where you and I should be focusing on this stock if we’re investing in this business, the government side, I think that’s nice to have, but that’s not the long term focus with government.

 

[00:03:27.880] – Sean

Contracts and businesses that I’ve been aware.

 

[00:03:31.690] – Sean

Of that have worked with the government is you’re typically not signing a government.

 

[00:03:35.690] – Sean

Contract for like a year or two.

 

[00:03:37.090] – Sean

These are really long relationships. The government does a lot of homework up front, usually over the span of almost a year or more to really determine if your business is the right fit, and then they engage in a relationship in a contract that can be.

 

[00:03:51.790] – Sean

Over a decade long.

 

[00:03:53.230] – Sean

Not always, but I’ve seen this happen in many cases, so that’s great. These are going to be long term clients.

 

[00:03:58.950] – Sean

That’s the goal.

 

[00:03:59.940] – Sean

But the focus, of course, is on the enterprise side.

 

[00:04:02.640] – Sean

So I do have to disagree.

 

[00:04:04.390] – Sean

I don’t think that’s a negative thing.

 

[00:04:06.010] – Sean

That the government revenue is slowing down.

 

[00:04:08.230] – Sean

I’m completely okay with that. I like to see that enterprise and commercial increase in now, another thing I’d.

 

[00:04:15.880] – Sean

Like to talk about here that I.

 

[00:04:17.300] – Sean

Do agree with and I just want to expand upon a little bit is when Palantir or really any enterprise business starts working with somebody is you’re not going to sell that $500,000 or million.

 

[00:04:30.060] – Sean

Dollar contract right away. What you do is like a try.

 

[00:04:32.590] – Sean

Before you buy situation. You run like a pilot. That means, like in Palantir’s case, you work with a client in your first year contract might be like $100,000 or less. And the idea there is to get that customer warmed up to your platform.

 

[00:04:48.750] – Sean

And just aware of what it can.

 

[00:04:50.720] – Sean

Do, like the full power, full potential. And that’s when your two comes around, is when you start selling. Now, the problem is in that first year you have really high expenses with their sales.

 

[00:05:03.280] – Sean

And this is one reason why the EPS was a mess.

 

[00:05:06.190] – Sean

As they’re hiring a lot of sales.

 

[00:05:07.490] – Sean

People, there’s a lot of labor.

 

[00:05:09.590] – Sean

Sales people are typically pretty expensive.

 

[00:05:11.830] – Sean

You have their base salary, and then there’s usually Commission or bonus on top of that, rightfully so. In this case, there’s a lot of upfront and expense and you start making those profits on customers near two and after.

 

[00:05:26.400] – Sean

So it’s a little slower.

 

[00:05:27.580] – Sean

But after you get a few customers.

 

[00:05:29.950] – Sean

The momentum really increases from there. I’ve seen this with other enterprise platforms like AWS. Microsoft Azure, Adobe has the Am tool. I’ve worked in software engineering for about.

 

[00:05:44.820] – Sean

15 years, and I’ve done a lot.

 

[00:05:46.460] – Sean

Of work on the enterprise side implementing these large projects. And yes, it’s not as lucrative that first year, but I’ve seen contracts that we’re talking multi million dollar contracts per year after that first year, and that’s a big deal.

 

[00:06:03.740] – Sean

So it’s a patient process in the.

 

[00:06:05.740] – Sean

Enterprise world, but when the momentum really.

 

[00:06:09.190] – Sean

Gets going, it’s well worth it. This is one reason why I have.

 

[00:06:12.600] – Sean

Multiple enterprise software platforms in my portfolio for Dnet. Cybersecurity is one I like Palantir, I’ve got Velocity, which is HR, payroll, all that kind of stuff.

 

[00:06:24.310] – Sean

Of course, Microsoft is in there, which has Azure as well.

 

[00:06:26.780] – Sean

But anyway, back to Palantir.

 

[00:06:29.170] – Sean

So let’s talk about a few points that I really agree with, which is.

 

[00:06:34.580] – Sean

In the earnings report. Alex talked about profiting off world conflicts like Russia and Ukraine.

 

[00:06:40.780] – Sean

I don’t think that’s anything to boast.

 

[00:06:43.560] – Sean

About or really even talk about. Like if there are conflicts in the world, don’t mention that you can make a profit on it. I don’t think that’s worthy of even mentioning. You should be placing your focus on the commercial side. How can you help businesses run more efficiently?

 

[00:07:02.040] – Sean

And that’s essentially what Palantir does.

 

[00:07:04.400] – Sean

It’s data analytics. They use the data and businesses. And believe me, working in big business for many years, there’s a lot of wasted time, wasted meetings, wasted emails, and a lot of inefficiencies with marketing, sales and operations. Where talent here can help is automate things, remove steps in the process. In my opinion, this is a big.

 

[00:07:26.230] – Sean

Deal for the future.

 

[00:07:27.410] – Sean

They’re a big necessity.

 

[00:07:28.440] – Sean

But to talk about like, yeah, if.

 

[00:07:29.740] – Sean

There’S a conflict, we’re going to make money and then make you money. We don’t want to hear it.

 

[00:07:34.220] – Sean

So Sasha, I agree with you.

 

[00:07:36.140] – Sean

I thought Alex Carbs comments in the earnings report, that was poor taste. I still respect what Alex has done. I respect what his leadership team has done.

 

[00:07:46.400] – Sean

But I do not want to hear.

 

[00:07:47.830] – Sean

Anything about world conflicts, tensions in the world, and how we as shareholders are going to make money on that.

 

[00:07:55.280] – Sean

That does not motivate me to be a shareholder. I’ll be honest and I know there’s a lot of people that agree with that.

 

[00:08:02.670] – Sean

Another thing that I thought was in.

 

[00:08:04.120] – Sean

Poor taste was Alex saying how good they were.

 

[00:08:07.580] – Sean

And he said it many times like.

 

[00:08:09.010] – Sean

We were very good at this, we’re.

 

[00:08:10.410] – Sean

Very good at that. That’s the last thing I would be doing, especially if my share price was at an all time high of 35 and now it’s less than $10. My responsibility as CEO, if I run that earnings call, would be to explain why this is happening and what I’m.

 

[00:08:27.250] – Sean

Doing about it and what my team.

 

[00:08:29.840] – Sean

Is really doing about it to improve. We won’t be talking about those world conflicts, but we would own what’s going on and try to give some peace of mind on the exact actions we’re taking. Like, what are you doing with the enterprise side?

 

[00:08:44.250] – Sean

This is what I’d also like to.

 

[00:08:45.760] – Sean

Hear is how are you going to serve the small and mid sized business market, those SMBs? Because that’s a huge market too. Maybe you can come up with like a light version of your enterprise platform.

 

[00:08:57.090] – Sean

That can serve that market.

 

[00:08:58.210] – Sean

That’s a little lower touch.

 

[00:08:59.560] – Sean

Maybe takes less time to onboard a.

 

[00:09:01.480] – Sean

Customer instead of like 6912 months or longer.

 

[00:09:05.220] – Sean

Maybe it’s like 30 days, 60 days, something like that.

 

[00:09:09.190] – Sean

Maybe a lower price point. So I would be looking at things like that. I look at the latest Netflix earnings call they talked about, yeah, they had a miss, but what are they doing about it? They went from one revenue stream to four. That’s what shareholders want to see. That’s the positive action. We want to see Palantir.

 

[00:09:29.230] – Sean

We didn’t really hear that.

 

[00:09:30.320] – Sean

They kept talking about how good they.

 

[00:09:31.760] – Sean

Were and that again was poor taste.

 

[00:09:35.370] – Sean

So let’s dive into the forest here and then I’ll talk about what I’m.

 

[00:09:38.190] – Sean

Doing with talent here. So with the first and let’s just take a look here at my screen real quick. Within Tykr, you can see this stock is still on sale.

 

[00:09:47.990] – Sean

Now for a stock that’s a little.

 

[00:09:49.390] – Sean

Less than two years in the public.

 

[00:09:50.870] – Sean

Market, more like a year and a.

 

[00:09:52.790] – Sean

Half, this is pretty good. Most stocks that IPO go public, they’re looking to raise funds, which means their financials are pretty weak. They’re usually going to be overpriced. So talented already is off to a good start.

 

[00:10:06.750] – Sean

They’re on sale a score of twelve out of 20 right now with our scoring system, which is pretty good, you.

 

[00:10:12.700] – Sean

Want to be north of ten. So twelve out of 20 is still good. And then margin of safety is 80%.

 

[00:10:18.090] – Sean

Right now.

 

[00:10:18.700] – Sean

I think in Tykr it’s saying seven point $55. And the sTykr price is $37, which means that’s intrinsic value, the fair value where it should be today, which I very much agree with. So the financials are looking pretty good.

 

[00:10:32.280] – Sean

But let’s dive into the meaning of the business. This is where I spend a lot.

 

[00:10:35.720] – Sean

Of time and this is what motivated.

 

[00:10:37.550] – Sean

Me from the beginning.

 

[00:10:38.400] – Sean

So this goes back to my comments on data analytics. So data is a big deal. More businesses need data to just be smarter, to get ahead of competition, to run more efficient. And this is where companies like Palantir can really thrive. They’re also enterprise software, which of course.

 

[00:10:57.980] – Sean

I made some great comments earlier is this is really sticky.

 

[00:11:01.420] – Sean

People are not trying something out for.

 

[00:11:03.440] – Sean

Like a week or two.

 

[00:11:04.610] – Sean

They’re committing to multi year contracts that.

 

[00:11:06.680] – Sean

Can be hundreds of thousands of dollars.

 

[00:11:08.220] – Sean

And up to millions of dollars per.

 

[00:11:09.620] – Sean

Year for just one customer.

 

[00:11:11.430] – Sean

I love enterprise SaaS.

 

[00:11:13.410] – Sean

It’s a great place to be.

 

[00:11:14.530] – Sean

Like I mentioned, I’ve got a few.

 

[00:11:16.720] – Sean

Enterprise SaaS businesses in my portfolio.

 

[00:11:18.600] – Sean

So that really motivated me.

 

[00:11:20.460] – Sean

So the meeting really checks out. To go back, the margin of safety really checks out.

 

[00:11:25.100] – Sean

So we got those two boxes checked with the competition.

 

[00:11:28.630] – Sean

We just want to take a quick look here.

 

[00:11:32.850] – Sean

I’m going to list a few of these. You’ve got Alterix, Snowflake, Data Dog. Splunk is another one. And looking at Alteris and Snowflake and Data Dog, these are all good businesses, and I feel they can all thrive in this market. It’s kind of like I have a few fintech stocks in my portfolio, like PayPal and Square. They can all thrive. There’s plenty of business for everybody. And I think the same for these businesses.

 

[00:11:59.170] – Sean

The thing that for the business that has done a really good job, I have to say, is that a dog they do serve.

 

[00:12:06.340] – Sean

They have enterprise customers, and that small and mid sized business market. And that’s a great place to be.

 

[00:12:13.500] – Sean

When you have a platform that can serve. Like, let’s say you’ve got a company.

 

[00:12:17.860] – Sean

With several different platforms within under its umbrella. That’s a really healthy business model. You can serve a lot more customers. There’s a lot more room to grow. So with Palantir, they’re only serving really that enterprise market.

 

[00:12:32.220] – Sean

Of course, there’s government market.

 

[00:12:34.280] – Sean

I’d really like to see as that.

 

[00:12:35.950] – Sean

Business matures, they introduce some kind of SMB focused product. I think that would be a great.

 

[00:12:42.020] – Sean

Way to get people using the tool.

 

[00:12:44.480] – Sean

Using its power, and then maybe upselling them to something that’s a little higher end.

 

[00:12:49.400] – Sean

So that’s what I would do, at least.

 

[00:12:51.810] – Sean

I want to also address this.

 

[00:12:53.770] – Sean

There’s this debate whether talent here is.

 

[00:12:56.600] – Sean

A consulting company or a software company.

 

[00:12:59.780] – Sean

So let’s just set the record straight.

 

[00:13:01.950] – Sean

Consulting companies don’t have a Bolt on product. They’re really selling to generate revenue within the business model.

 

[00:13:09.540] – Sean

For example, I’ve done a lot of.

 

[00:13:10.780] – Sean

Work with Accenture and Deloitte are two.

 

[00:13:13.010] – Sean

Really solid management consulting companies.

 

[00:13:17.250] – Sean

They’re straight up consulting, though.

 

[00:13:18.920] – Sean

They’re not providing a service and a software product. So you’re making money on both. With Palantir, they have what’s called. And you see this within enterprise software, they call Pro Serve professional service, and it’s the onboarding, it’s all the work upfront. And then there’s the ongoing support that.

 

[00:13:38.480] – Sean

You have with that tool.

 

[00:13:39.700] – Sean

It’s just a Bolt on service to the software. And that’s important because when you start working with these salespeople that are the.

 

[00:13:50.260] – Sean

Salespeople of like a large enterprise platform.

 

[00:13:54.630] – Sean

The best in class, they’re just real people. They’re down to Earth. They’re nice. They want to come in, they want to provide awesome customer service, and they take you out to dinner, go out for golf, whatever, and the best in class, they just do that like they treat people with respect. They’re not corporate. They’re really there along the way.

 

[00:14:17.780] – Sean

And when you have people like that.

 

[00:14:19.910] – Sean

Serving that customer, that large entity, the stickiness increases even more.

 

[00:14:25.390] – Sean

In other words, if you were to.

 

[00:14:26.590] – Sean

Take that salesperson out of the equation and only use the software, sure, it can be a great product, but the stickiness isn’t quite there. So Palantir is doing a really good job of building those relationships.

 

[00:14:39.450] – Sean

They get those sales people engaged.

 

[00:14:40.830] – Sean

They probably got a whole team interwoven with the customer there, and they’re taking care of them. They’re there to ask questions, improve the tool, just make it better over time. And that’s a big win that creates that stickiness, that scalability that we’re starting to see with Palantir. So we know that whoever is their CRO of their chief revenue officer is really leading a really solid team. So with the moat, in this case, I do check. The box at the moat checks out as well.

 

[00:15:12.700] – Sean

I think, yes, there’s a few competitors.

 

[00:15:14.470] – Sean

In this space, but Palantir is doing a pretty good job.

 

[00:15:17.460] – Sean

I think they have a sophisticated product.

 

[00:15:19.700] – Sean

And I think they have a lot.

 

[00:15:20.680] – Sean

Of opportunity to grow in this market.

 

[00:15:22.820] – Sean

So that box checks.

 

[00:15:25.440] – Sean

The last M in the equation of.

 

[00:15:27.880] – Sean

The four M is management. So Alex carpet, as I mentioned, is the CEO.

 

[00:15:33.110] – Sean

I think he’s done a great job.

 

[00:15:34.480] – Sean

Since the company really started in 2003. Peter Thiel is a co founder.

 

[00:15:40.030] – Sean

If you don’t know him, he was.

 

[00:15:41.580] – Sean

The first investor in Facebook.

 

[00:15:43.430] – Sean

He also has a venture capital firm.

 

[00:15:45.360] – Sean

That has invested in a lot of other businesses. I think Tesla is on that list.

 

[00:15:50.110] – Sean

And then his early days, he started PayPal.

 

[00:15:54.590] – Sean

So him and Elon Musk were involved.

 

[00:15:57.060] – Sean

In that organization in the late 90s, early 2000s.

 

[00:16:01.450] – Sean

So he has a really nice winning track record. He’s invested in a lot of businesses.

 

[00:16:06.190] – Sean

That have done very well.

 

[00:16:07.790] – Sean

And that’s another thing that motivated me to really turn my attention to Palantir.

 

[00:16:12.250] – Sean

In the beginning is, hey, you’ve got a solid management team here.

 

[00:16:16.440] – Sean

You get the right people leading the organization.

 

[00:16:19.070] – Sean

Of course, Peter Thiel is not involved with day to day operations, but he’s on the board and he’s heavily influential.

 

[00:16:25.860] – Sean

So with this, I do say all.

 

[00:16:28.450] – Sean

Four Ms check out, but here’s what I’m doing. I’ve been heavily investing in the stock.

 

[00:16:35.320] – Sean

Through 2021, and what I’m doing now.

 

[00:16:39.610] – Sean

Is I’m still investing a little, but.

 

[00:16:42.200] – Sean

I have a focus portfolio of about.

 

[00:16:44.000] – Sean

Ten stocks, and I need to turn my attention to some of the other stocks because they’re all pretty much beaten down. They’re all tech stocks. So I’m slowing down Palantir, and I’m.

 

[00:16:55.120] – Sean

Starting to go into, like, I’ve got.

 

[00:16:56.860] – Sean

Microsoft long term hold there. Google, you got PayPal, Apple, AMD.

 

[00:17:02.820] – Sean

There’s a few others as well.

 

[00:17:03.960] – Sean

Fortinet Pelosi.

 

[00:17:06.570] – Sean

So I’m starting to kind of diversify my investments.

 

[00:17:09.580] – Sean

There still long term holder of talent here. But I think, Alex, if I were.

 

[00:17:15.040] – Sean

You, I kind of pull back on.

 

[00:17:16.240] – Sean

The comments around benefiting or profiting from.

 

[00:17:21.080] – Sean

The conflicts in the world.

 

[00:17:22.150] – Sean

And let’s really focus on the commercial side, both enterprise. And let’s see what you got. If there’s anything out there SMB related, that would be really awesome to see you guys jump into that market. All right.

 

[00:17:33.530] – Sean

Hopefully, this video helps. We’ll talk soon.