Data is the new oil; and will eventually become a digital commodity. As corporations become increasingly reliant on data to make decisions, Palantir stands to benefit.
I believe Palantir should be a part of your portfolio for three reasons:
1) Given that Palantir's revenue largely stem from contracts with the Government and Business Corporations, the Company benefits from recurring revenues because Business-to-Business (B2B) sales are extremely sticky in nature. Companies tend not to switch vendors once they get into a contractual agreement with one, and this brings me to my next point.
2) Palantir's unique product offering increases switching costs for its customers. Additionally, word of mouth spreads fast; leading to strong network effects, thus bringing more business to Palantir. I would say that it has a narrow moat - to me, that is good enough.
3) The Company guides 30% annual revenue growth for the next 5 years, I personally believe this is grossly under promised given a slew of new contracts (and contract renewals) the Company gets.
Of course, buying into Palantir does not come without risk. The management has mentioned that it will continue its stock based compensation, and only time will tell whether the reward will outweigh the risk.
Technically, PLTR has broken out of the downtrend and has formed an ascending triangle on the weekly chart (descending volume confirms the consolidation pattern before the breakout; the stock is gaining strength before pushing upwards). It is currently facing overhead resistance, so a clear break (and stay) above the $25 - $25.30 level will signal blue skies ahead.
I believe Palantir should be a part of your portfolio for three reasons:
1) Given that Palantir's revenue largely stem from contracts with the Government and Business Corporations, the Company benefits from recurring revenues because Business-to-Business (B2B) sales are extremely sticky in nature. Companies tend not to switch vendors once they get into a contractual agreement with one, and this brings me to my next point.
2) Palantir's unique product offering increases switching costs for its customers. Additionally, word of mouth spreads fast; leading to strong network effects, thus bringing more business to Palantir. I would say that it has a narrow moat - to me, that is good enough.
3) The Company guides 30% annual revenue growth for the next 5 years, I personally believe this is grossly under promised given a slew of new contracts (and contract renewals) the Company gets.
Of course, buying into Palantir does not come without risk. The management has mentioned that it will continue its stock based compensation, and only time will tell whether the reward will outweigh the risk.
Technically, PLTR has broken out of the downtrend and has formed an ascending triangle on the weekly chart (descending volume confirms the consolidation pattern before the breakout; the stock is gaining strength before pushing upwards). It is currently facing overhead resistance, so a clear break (and stay) above the $25 - $25.30 level will signal blue skies ahead.