Palantir Technologies

Palantir Technologies Jonathan Poland

Palantir (PLTR) is named after the magical crystal seeing stones from J.R.R. Tolkien’s Lord of the Rings series of books, which are used for communication and to see events in any part of the world. Palantir has three main products: Gotham, Foundry, and Apollo. Gotham is utilized by counter-terrorism analysts in the United States Intelligence Community (USIC) and the United States Department of Defense (DOD). Foundry serves commercial clients  and the Apollo platform is used to manage and deploy both services from Gotham and Foundry.

as of February 8, 2023

I like Palantir, even though it may not book a profit until 2025. It’s generating $500k in sales per employee and looking to grow at 20% in 2023. However, it’s also priced at 9x sales and produces a net loss, which together means it’s likely not a good investment. You see, when you actually have a durable advantage, you can book a healthy profit, especially after nearly 20 years in business. It’s true that Palantir has very good gross margins, north of 80%, but that is getting eaten up in SG&A costs. Now, the positive trend is that those costs are up only 70% versus revenue up 200%. If that continues long-term, profits will be huge in 5 and 10 years. 

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