Is it Too Late to Buy Palantir Stock? - Latest Global News

Is it Too Late to Buy Palantir Stock?

Another earnings release appeared to be coming Palantir (NYSE:PLTR) in a region-bound state. Shares had risen again to over $25 per share, but investors sold the stock after the first quarter 2024 results were announced.

Palantir has not risen significantly above $25 per share since the end of 2021. Given the apparent inability to break through this barrier, investors may now be wondering whether the stock’s gains have already been realized.

The state of Palantir inventory

Admittedly, Palantir’s relatively short history brings with it uncertainty. The big data company launched its initial public offering (IPO) in late 2020. After rising as high as $45 per share in early 2021, the stock quickly fell back to the mid-$20 per share range and has has not exceeded this level since then.

In fact, the stock was likely oversold in late 2022 when it briefly fell below $6 per share, and investors who bought at that time are sitting on significant returns.

But now that the stock is just above $20 per share, it may be worth asking whether investors have hope that the stock will rise above the mid-$20 per share range.

In the first quarter of 2024, Palantir’s revenue of $634 million increased 21%. While that’s a significant increase, it doesn’t compare to a comparable stock Nvidiawhich has seen triple-digit sales growth in recent quarters.

Additionally, Palantir reported net income attributable to common shareholders of $106 million, its sixth consecutive profitable quarter and well above the profit of $17 million in the year-ago quarter. Unfortunately for shareholders, that leaves the price-to-earnings (P/E) ratio at around 172, and if you measure valuation using the forward P/E ratio of around 63, Palantir is still an expensive stock.

In addition, the sales forecast for the full year 2024 is almost $2.7 billion. That would represent a 20% annual revenue growth rate, which may not be enough to sustain the current valuation.

Palantir’s customer growth

The magnitude of the revenue growth is mind-boggling given Palantir’s value proposition. Palantir operates in both the national security and commercial industries. Given the limited number of governments that can purchase Palantir’s services, most of the growth has come from the commercial side.

The number of its commercial customers in the U.S. increased 69% compared to the previous year’s level. Remaining deal value in the US commercial sector also increased by 74%.

Additionally, the company has reported stunning productivity gains with its latest Artificial Intelligence (AIP) platform. Palantir announced this in its first quarter 2024 earnings release Lowes used AI in its customer service department and reduced overdue tasks by 75%. Additionally, the Cleveland Clinic was so impressed that it embarked on a 10-year plan to introduce AIP across a network of hospitals.

In the face of such improvements, organizations appear to be negligent not Contract with Palantir. However, unless that value proposition delivers faster revenue growth, investors may be hesitant to buy shares at today’s prices.

Are investors too late?

Given Palantir’s growth prospects, it may not be too late for investors to buy the stock. In fact, the recent selloff could be a good time to slowly add shares of AI stock.

Admittedly, Palantir stock is selling at an expensive price, and it may take some time for the stock to grow beyond the mid-$20s per share range in the near term.

Nonetheless, the company appears to have achieved sustained profitability and profits are expected to grow rapidly in the foreseeable future. Additionally, the productivity gains from AIP should lead to more long-term agreements like the one signed with Cleveland Clinic.

Such improvements have made Palantir an essential AI tool for numerous companies. This factor should push the stock price back into the mid-$20s per share range and eventually beyond.

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Will Healy holds positions at Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool recommends Lowe’s Companies. The Motley Fool has a disclosure policy.

Is it too late to buy Palantir stock? was originally published by The Motley Fool

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