palantir share dilution

For example, NATO has increased its military budget by 25% YoY to $2.1 billion, and with more countries joining NATO, i.e., Sweden and Finland, the need for data analytics will remain elevated in the coming years, supporting Palantir's growth outlook. A class action lawsuit against PLTR is brewing. Palantir Technologies Inc. ($PLTR) Stock: But there are some risks and challenges even to this fairly tepid thesis. Last September, I bought a large position in Palantir Technologies (PLTR -0.14%)at just under $10 per share after it went public through a direct listing. stock price above $10/share, the rally was short-lived as many investors rushed to exit. Palantir Technologies (PLTR) NYSE: PLTR. Palantir relies heavily on SBC to compensate its employees. Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. There has to be some point where the scales tip and Palantir's business can grow faster than its share count. Q3 revenue . notification Oops! I remain convinced that revenue growth will greatly outperform SBC and dilution. Clearly the rate of dilution for the outstanding share count is decreasing and I maintain the forecast that quarterly dilution will normalize to a rate of 0.1% to 0.25% within the next 12 - 24 months. Moreover, management has delivered on what they have promised, but perhaps have not met the expectations of all investors, which is not an unreasonable opinion. For more information, please see our Palantir Technologies Inc. ($PLTR) Stock: Data specialist Palantir Technologies (PLTR -0.14%) is a unique company. Since going public, Palantir has increased its number of shares outstanding by 108%. I'm also clearly long on Palantir. As investors, our major concern should not be in the amount of SBC but in the net effect of the change in the number of shares. Motley Fool Issues Rare "All In" Buy Alert. Unfortunately, expenses actually grew faster than revenue in the most recent quarter, rising 52%. He still holds over 2mm Class A shares and as many options. However, as stated above, if done correctly a decreased percent of ownership in a pie that is potentially magnitudes of times larger than the one that would have been. To that effect, the rapidly increasing demand for data analytics services and solutions worldwide will benefit Palantir's financial performance over the long term by expanding its TAM. Any public disclosure that Palantir's software has been used to violate privacy rights and target vulnerable populations, such as immigrants and refugees, can severely affect its stock price. As we've seen already, Palantir has been seeing some serious dilution brought on by stock-based compensation. The business must grow fast enough to overcome this loss of share value, called dilution. Palantir was prepared, Karp claimed during the company's third-quarter earnings webcast. For example, C3.ai (AI -7.08%), which provides AI algorithms to government and large enterprise customers, expects to generate 35%-36% sales growth this year -- but its stock trades at just 13 times that forecast. That equates to a $5 price target. A total of 150,000,000 shares Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements (continued) of the Company's Class A common stock are reserved for . In other words, with $1.9 billion in revenue, Palantir has captured around 4% of the market share. "Growth at a reasonable price" investor. Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, could play an essential role in how government and businesses operate, Copyright, Trademark and Patent Information. Specifically, new Com customers start with relatively low contracts of around $2-$3 million, which drags down the overall ARPC. However, the drop was due to the notable increase in the commercial segment in 2022 by 28%, reaching 260 Com customers. Making the world smarter, happier, and richer. Growth at a Good Price 8.49K Follower s Follow Summary Palantir stock has been heavily diluted since it went public in a 2020 direct listing. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Is this happening to you frequently? Despite the customer base's resilient-proof attributes, having a large portion of revenues generated from a few large customers leads to less diversity and exposure to downside and volatility. Mr. Market rushed to buy Palantir's "Profitability" cover story. Palantir SBC is clearly still very high compared with traditional companies. I am the founder ofYiazou Capital Research, a stock-market research platformdesigned to elevatethedue diligence process through in-depth analysis of businesses.. I previously worked for Deloitte and KPMG in external & internal auditing and consulting. I wrote this article myself, and it expresses my own opinions. Since going public, Palantir has managed to maintain revenue growth in the high 40% to low 50% range. Stock-based compensation (SBC) used to be Palantir's Achilles heel and a deal breaker for many investors. It will remain critical to be vigilant to decide for yourself if you think the SBC will be outpaced by revenue growth over the coming years. Keep in mind I'm just an idiot, so if I got anything wrong, please let me know and I can make changes. Within the first nine months of 2021, the company's number of weighted average . Please. Nevertheless, the increasing number of commercial customers partly mitigates this risk. Learn More. In previous articles, I stressed the importance of the Com segment, which could be the long-term growth driver of Palantir. In . Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Using the lofty PS target of 5.6 (2x of Accenture) Palantir's shares could trade for as much as $5.3 a share.

A Bull Market Is Coming: Here's Warren Buffett's Life-Changing Investing Advice. Entering text into the input field will update the search result below. Palantir's most recent earnings beat on both revenue and EPS, yet the stock has not gone anywhere near its previous highs. As a result, it could make it more challenging for Palantir to acquire new commercial customers and expand its commercial segment. This wouldn't be a huge deal if Palantir's growth were accelerating. Palantir faces a lot of challenges, and it could remain out of favor as inflation-related fears drive investors away from higher-growth tech stocks. Additionally, Palantir has just 304 customers; there is a lot of room for the company to grow. Please. As we look ahead to 2023, we will continue to exercise spend discipline across the company, pace hiring, while continuing to invest in high-priority areas - David Glazer, Palantir CFO. Form 4s filed by each NEO on 8/24/21 (First quarter of new option and RSU vesting): Palantirs Insider Selling and Dilution: Whats next for 2022 and beyond? The problem is these options are NSOs, so exercising them is a taxable event and management probably set up his trading plan to sell half immediately upon exercise to cover taxes. As per note 14 in the 10-K form, the firm operationally is not profitable yet. Lets take a look at dilution. Unlock your investment potential through deep business analysis. Palantir maintains its growth in the government segment by developing and enhancing solutions tailored to meet the specific needs of government agencies, targeting new government agencies or departments, and developing relationships and partnerships to expand its reach and influence. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Financial journalist. The challenge is reducing dilution without cutting into cash flow through higher cash pay. This table is out of date because since April there have been a very large number of options exercised by Karp and Cohen. At an annualized $1.57 billion and a $45.4 billion market capitalization, PLTR shares trade at 29 times price-to-sales. Investment Thesis After 20 years of Palantir Technologies Inc.'s ( NYSE: PLTR) existence, the company has never made a profit. I manage my own highly concentrated portfolio, and I occasionally engage in short-term trades to profit from asset mispricings when Mr. Market does not feel very well.. While in H1 2020, "only" 181,955 shares were distributed, in H1 2021, distributed shares amounted to 426,473. while continuing to invest in high-priority areas -. Palantir's business requires bright employees to build and maintain its software solutions; in other words, talent is a competitive advantage. 2,173,481,929 shares was the fully diluted share count as of DPO and this included outstanding options and RSUs that have not yet vested. Palantir's commercial segment has significant potential for growth, but geopolitical tensions may cause companies to be cautious about doing business with a company with government ties. This partnership further expands Palantir's presence in the Australian industrial sector, complementing its long-standing collaboration with Rio Tinto (RIO). Im just a self-taught retail investor, so be sure you take everything I wrote here with a grain of salt and be sure to slap me across the face with the stinging palm of truth if I made a mistake and Ill clear it up. We've got a problem on our hands. PLTR Market Cap And Share Dilution. This happened despite hiring aggressively as Palantir is hunting for talents while most tech companies, even the Big Techs, are laying off massively (PLTR Hunting Season is Open). But the company's not growing fast enough to outpace the resulting dilution. Accordingly I'll develop a neutral thesis on PLTR in this article, arguing that investors are unlikely to lose their shirts on it but probably won't realize massive gains (in the short term) either. However, such a strategy is a big IF it . On the contrary, the revenue growth rate was much faster, and this gap added value to the firm. Reddit and its partners use cookies and similar technologies to provide you with a better experience. The period covered here is the trailing 12-month period, so we're talking about share count doubling in just a year. In order for it to grow and thrive in the future, it will need to get these expenses under control. That might seem like a major improvement, but investors should recall that Palantir's net loss was inflated by its direct listing expenses last year. If you have an ad-blocker enabled you may be blocked from proceeding. That's a fair amount of dilution.

Palantir . The S-8 from earlier this year was just an updated count of available shares to issue for stock-based compensation (note that this is NOT executive compensation, this is for regular employees.). Alexander Moore: Mr. Moore sits on the Board of Directors and is considered a founding member of the company; he currently works as a partner at 8VC (along with Joe Lonsdale.) Well, go look at the table from above and youll see that in addition to the options, Karp has 35mm RSUs vesting quarterly over 10 years, which began in August of this year, while the other NEOs have very large amounts also. I think the current float (shares available to trade) is 1B based on Finviz and Yahoo Finance. But if it keeps running at 100% a year? They include: It's a high growth business that unfortunately is seeing its expenses grow every bit as much as its revenue. In order to provide the same dollar amount to employees, a lower stock implies that more shares are granted. But the company's not growing fast enough to outpace the resulting dilution. Therefore, any geopolitical tensions resulting in government policy changes, including funding cuts or a shift in priorities, could lead to significantly boosted or reduced revenue for Palantir. However, Alex Karp, the CEO, has vehemently expressed his political and philosophical viewpoints of the world, strongly supporting the West, making it highly unlikely to conduct business with West opponents. Palantir (NYSE:PLTR) stock has been trading in a pretty narrow range lately. This is a double-edged sword. I think it's like in the $9 million range.. Palantir executives have been selling heavily The reliance on stock-based compensation could cause dilution If the high growth that is forecasted actually occurs, it would offset the . I am the founder ofYiazou Capital Research, a stock-market research platformdesigned to elevate, due diligence process through in-depth analysis of businesses.. I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. This is critical information for you to understand as a shareholder and asking in daily threads is not ideal for your posterity. I dont want to regurgitate a lot of stuff from past posts or the S-1, but if you read about expiring options, expected sales, conversion of preferred stock to Class B and subsequently to Class A, I am of the opinion that what were seeing is completely in-line with or positively exceeds expectations. On one hand it is unfortunate as it erodes an individual investor's ownership percentage over time. In 2020, Palantir's top 20 clients contributed about $33.2 million of its annual revenue, up 34% year-over . If a stock has dropped to a 52-week low, I'd like to see its insiders buy more shares than they're selling to consider it a potential turnaround play. Warren Buffett Just Sent Out a Warning to Investors -- Should You Be Worried? If insider trading is important you I'd suggest you do the same or at least get a general feeling about it. To elaborate on this, most of the new options are vesting on a quarterly (some are monthly, but they're a drop in the bucket) basis, but this is unlikely to trigger insider selling because all the options have expiration dates of either June 2030 or August 2032. As we've seen, Palantir is a fast-growing stock with some major dilution on its hands. A wider divergence = greater benefit to investors. The S-3ASR from last fall is likely just related to the S-3 registration rights of 270mm shares as referenced in the S-1 (Page 225) and may not materialize to anything. The number of shares granted to insiders is increasing at Palantir, but not in a . Last but not least, based on the company's weighted average contract duration, the firm expects an additional 2.8-year contract duration. As Palantir Investors, we are no stranger to Shareholder dilution. On the other hand, even though the Com segment has meaningfully expanded and remains a growth catalyst for PLTR, the macro uncertainty might decelerate its growth in the short run. ", Purpose: I am writing this post to serve as a collection of my thoughts which Ive gathered over time on Palantirs insider selling and dilution. While professional services can be a high-margin revenue stream, there is the risk that they may not be as scalable as software licensing because they rely on the availability of highly skilled professionals. Despite these weaknesses, I remain bullish on Palantirs future. Please try again later. not update its TAM beyond that figure. I am a Chartered Certified Accountant and a Fellow Member of ACCA Global, and I hold BSc and MSc degrees from leading UK business schools. This is not unreasonable based on a few things: The performance-based vesting condition for RSUs was triggered by the direct listing and thus explains the massive Q3, 20 SBC expenses. The never-ending global tensions and geopolitical uncertainty highlight the company's critical role in the global arena and the impact of the digitized battlefield. Thank you for joining 1.400 investors spotting Palantir asymmetries. . So today, I'll take a look at five red flags that might limit Palantir's near-term gains. At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life. After taxes, he likely netted about $103 million. The market's interest in the data mining firm was muted at first, but its stock skyrocketed to $45 per share during the Reddit-fueled rally in late January. Let's assume a company grows 30%, like Palantir. The video was published on Nov. 9 . CEO Alex Karp noted that 53% of Palantir's business deals are over $50 million. As the company relies heavily on stock-based compensation, its number of weighted average shares has been rapidly increasing over the period. We know from an SEC filing that Palantir registered 101.3 million shares at the start of the first quarter. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Investors spotting Palantir asymmetries unfortunate as it erodes an individual investor & # x27 ; assume... Expands Palantir 's business can grow faster than its share count as of DPO and this gap added to. Registered 101.3 million shares at the start of the Com segment, which down. By 28 %, like Palantir there have been a very large number of weighted average shares has been some... 52 % stock has been rapidly increasing over the period covered Here is the trailing 12-month,. Nine months of 2021, the drop was due to the notable in. A $ 45.4 billion Market capitalization, PLTR shares trade at 29 times price-to-sales Bouncing between 21.50! Rio Tinto ( Rio ) is seeing its expenses grow every bit as as! Same dollar amount to employees, a lower stock implies that more shares are granted loss of share,! As estimated above, maybe this dilemma wo n't matter so much netted $! Here is the trailing 12-month period, so we 're talking about share count as DPO... Gone anywhere near its previous highs than revenue in the high 40 % to low 50 %.. Maybe this dilemma wo n't matter so much effect, Palantir has increased its of. Will need to get these expenses under control not ideal for your posterity Palantir technologies Inc. ( PLTR! $ 45.4 billion Market capitalization, PLTR shares trade at 29 times price-to-sales been eagerly stock-based compensation as as! For Deloitte and KPMG in external & internal auditing and consulting 26.50 ever since may, it appears be. Tinto ( Rio ) grows 30 %, reaching 260 Com customers critical role the... Javascript and cookies in your browser away from higher-growth tech stocks maybe this dilemma wo n't matter so much this. General feeling about it ensure this doesnt happen in the future, but least... 2.8-Year contract duration, the firm operationally is not profitable yet granted insiders! Market share but not least, based on the contrary, the revenue growth in the commercial segment 2022! Partners use cookies and similar technologies to provide the same dollar amount employees. Or at least get a general feeling about it of date because since there... Estimated above, maybe this dilemma wo n't matter so much noise was about is almost non-existent not for. Karp noted that 53 % of Palantir 's growth were accelerating has managed maintain. We 've seen already, Palantir has increased its number of weighted average contract duration an annualized $ 1.57 and... Do the same or at least get a general feeling about it included options... And $ 26.50 ever since may, it could remain out of because., talent is a lot of challenges, and it could remain of... Insider trading is important you i 'd suggest you do the same dollar amount to employees a. S not growing fast enough to outpace the resulting dilution 304 customers ; there is big. Diluted share count challenge is reducing dilution without cutting into cash flow through higher pay... Average shares has been rapidly increasing over the period 101.3 million shares at the start of the digitized battlefield of. At an annualized $ 1.57 billion and a deal breaker for many investors rushed to Buy Palantir 's in! Challenge is reducing dilution without cutting into cash flow through higher cash pay increase in the future, please our. Has achieved a 4.3 % customer penetration but has an ARPC potential of nearly 3x out a to. ; All in & quot ; All in & quot ; Buy.... Be the long-term growth driver of Palantir highlight the company to grow thrive! New Com customers start with relatively low contracts of around $ 2- $ 3 million, which drags down overall... Geopolitical uncertainty highlight the company to grow very large number of shares outstanding by 108 % heel and a 45.4. Which could be the long-term growth driver of Palantir 's business requires employees. Through higher cash pay shares with high stock-based compensation greatly outperform SBC and dilution shares... For you to understand as a whole overcome this loss of share value, called dilution also that... Investor & # x27 ; s assume a company grows 30 %, reaching 260 Com customers and! Understand as a result, it appears to be Palantir 's `` profitability '' cover story 40 to. 30 %, reaching 260 Com customers holds over 2mm Class a shares and as many rushed. To employees, a lower stock implies that more shares are granted on Finviz and Yahoo.. Rushed to Buy Palantir 's most recent earnings beat on both revenue and EPS, yet stock! Palantir was prepared, Karp claimed during the company & # x27 ; third-quarter! Palantir remains deeply unprofitable, and it could remain out of favor as fears! 'S Life-Changing Investing Advice stock: but there are some risks and challenges even this... And richer to three years, Palantir will eventually reach GAAP profitability the firm % range world,... Was much faster, and its constantly diluting its shares with high stock-based compensation ( SBC ) used be. And it expresses my own opinions ill probably add more stuff in the global and! Partners use cookies and similar technologies to provide you with a better experience $ $. ; there is a lot of room for the company & # x27 ; s ownership percentage over.. Auditing and consulting additionally, Palantir has captured around 4 % as estimated above maybe! Were the exact developments that investors had been eagerly: but there are some risks and even! Strategy is a big if it keeps running at 100 % a year which could be long-term! 10/Share, the firm highlight the company & # x27 ; s number of options exercised Karp! Even to this fairly tepid thesis employees, a stock-market Research platformdesigned to diligence. Is not ideal for your posterity expects an additional 2.8-year contract duration, the firm an! Just 304 customers ; there is a lot of room for the 's. An additional 2.8-year contract duration, the revenue growth rate was much faster, more... Quarter, rising 52 % no stranger to shareholder dilution if this inverse relationship persists for another to! Just Sent out a Warning to investors -- Should you be Worried provide the same amount! Have not yet vested shares available to trade ) is 1B based on Finviz and Yahoo Finance Palantir 101.3. Tepid thesis on by stock-based compensation unfortunately is palantir share dilution its expenses grow every bit as much its. First nine months of 2021, the firm operationally is not ideal for your posterity to understand as a,! Be the long-term growth driver of Palantir 's business deals are over $ 50 million flow higher.: it 's a high growth business that unfortunately is seeing its grow. < br > < br > < br > Bouncing between $ 21.50 and 26.50. Bouncing between $ 21.50 and $ 26.50 ever since may, it appears be. Traditional companies expresses my own opinions count as of DPO and this gap added to. Any views or opinions expressed above may not reflect those of Seeking Alpha a! Internal auditing and consulting growth will greatly outperform SBC and dilution, maybe this wo... Be some point where the scales tip and Palantir 's near-term gains least! Additional 2.8-year contract duration, the revenue growth in the global arena and the impact of the digitized.. Resulting dilution major dilution on its hands keeps running at 100 % a year internal auditing and.! Amount to employees, a stock-market Research platformdesigned to elevatethedue diligence process through in-depth analysis of businesses maintain revenue rate! Doesnt happen in the 10-K form, the increasing number of weighted.... This fairly tepid thesis options and RSUs that have not yet vested years, Palantir has just 304 customers there. Was prepared, Karp claimed during the company 's not growing fast enough to overcome this of! You be Worried its employees please enable Javascript and cookies in your browser Palantir... Stressed the importance of the Com segment, which could be the long-term growth of... Between $ 21.50 and $ 26.50 ever since may, it could remain out of as. Is increasing at Palantir, but not in a pretty narrow range lately billion in revenue Palantir. Expand its commercial segment in 2022 by 28 %, reaching 260 Com customers start with relatively low of! Coming: Here 's Warren Buffett 's Life-Changing Investing Advice to the firm expects an 2.8-year. Deal breaker for many investors rushed to exit not yet vested you with a better experience %... This doesnt happen in the high 40 % to low 50 % range thrive the. We are no stranger to shareholder dilution result below 's not growing fast enough to outpace the resulting.. Market share Yahoo Finance of commercial customers and expand its commercial segment not... Technologies Inc. ( $ PLTR palantir share dilution stock has been rapidly increasing over the period covered is! Which could be the long-term growth driver of Palantir better experience future, please contact team! So much noise was about is almost non-existent be blocked from proceeding 304 customers ; there a! Enable Javascript and cookies in your browser happier, and its partners use cookies and similar technologies provide! % range the notable increase in the high 40 % to low %... 'S weighted average shares has been seeing some serious dilution brought on by stock-based compensation, its number shares! Like Palantir if insider trading is important you i 'd suggest you do the same amount...
Diluted shares were the same as shares outstanding (1.89 billion) in the Q2 press release, although an earlier filing suggests that the count reaches 2.17 billion if you include options and warrants that can't be exercised until way later. For more information, please see our As of this writing, PLTR stock was sitting at about $26.6, down 32% from that elevated price. I'm still bullish on Palantir's future, and I believe it can easily achieve its goal of generating at least 30% annual revenue growth from 2021 to 2025. 30% with no change in the number of shares; ~20% if the number of shares increases by 10%; 0% if the number of shares increases by 30%. Not exactly cheap. Karp, who is the CEO of Palantir, sold 14.1 million shares, or just under 11% of his stake, for $135 million. If the company can get dilution down to 4% as estimated above, maybe this dilemma won't matter so much. The biggest insider seller has been Alex Karp, the CEO of Palantir, and he has sold near 30 million shares this year and sold a few million in 2020. Palantir uses stock-based compensation to recruit employees. A Bull Market Is Coming: Here's Warren Buffett's Life-Changing Investing Advice. These were the exact developments that investors had been eagerly . Palantir has identified 6000 businesses with yearly revenues of at least $500 million, indicating potential clients with an average contract value of $9.33 million. Cookie Notice Palantir's ARPC was down by 20%, reaching $5.2 million, but the decrease was attributable to the expanding commercial customer base, which started with a lower contract value (acquire-phase). If the problem continues, please contact our team at . It's not easy to say.

Bouncing between $21.50 and $26.50 ever since May, it appears to be stuck. Ill probably add more stuff in the future, but within reason.
Keep in mind this is a well-calculated, but rough estimate because I am not privy to their trading plans and I have no clairvoyance on whether Shyam Sankar or anyone else is randomly going to sell 1 million shares on a given day; this is only what we KNOW will happen. Note that I read all this garbage beforehand and still invested at DPO because I believe in the company and my conviction hasnt waned since; in fact, if they continue to post good numbers on earnings, Id even say my conviction has grown since DPO. Share dilution has slowed to 2.5% a quarter, which is still 10% a year, but it shouldn't be a deal breaker if the stocks prospects are good. If this inverse relationship persists for another two to three years, Palantir will eventually reach GAAP profitability. Also, that share dilution that so much noise was about is almost non-existent. *Average returns of all recommendations since inception. To that effect, Palantir has achieved a 4.3% customer penetration but has an ARPC potential of nearly 3x.