Palantir: A Deep Dive Into Its Valuation Suggests It's Not Overvalued

Palantir Technologies Inc (PLTR) is a very interesting company that appears to be overvalued on the surface. As a matter of fact, that's exactly what we thought when we first came across the company. Its price-to-sales multiple is almost 40x and it has negative operating income. Although the loss comes from stock-based compensation which isn't a cash expense, it still dilutes shareholders. However, when looking more closely, it appears that Palantir may actually be reasonably priced.  ​

In this article, we won't go into too much detail on what Palantir does as there are many articles already written in great detail explaining that. In short, Palantir develops advanced data analytics platforms which are customized to each client's unique needs. They have no "out of the box, ready to go" platform to which any company can just subscribe and start using. As a result, the company focuses on few very large customers. 

Here are the main points of this report: 

• Palantir's bespoke approach to developing platforms provides a competitive advantage for retaining customers. 
• The high revenue growth is supported by the fundamentals of the company. 
• Valuation is valid while discount rates are low and if stock-based compensation is reined in. 

 
*This is a premium seeking alpha article, so we can’t fully post it here.*   

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