Palantir (NYSE:PLTR) has been making waves recently, and it’s easy to see why. The company has been on a remarkable run in 2024, playing a pivotal role in fueling the AI revolution that continues to take the world by storm. With its impressive performance, Palantir shares have skyrocketed by 87% year-to-date.
The company’s latest quarterly report was another win. U.S. commercial revenue soared by 55% year-over-year, while total revenue hit $678.13 million – a 27.2% increase, outpacing estimates by $25.71 million. Additionally, adjusted EPS came in at $0.09, slightly ahead of analysts’ expectations by $0.01. Looking ahead to Q3, the company projects revenue in the range of $697 to $701 million, exceeding the consensus estimate of $680.2 million.
Palantir investors had more reason to celebrate with the recent announcement of a strategic partnership with Microsoft. This collaboration will see Palantir’s products integrated into Microsoft’s government computing platforms.
So, should investors seek to jump on board before Palantir’s stock prices rocket even higher?
Interestingly, Stone Fox Capital investor offers a contrarian perspective, suggesting it might actually be time to “find an exit point.”
SFC notes that while Palantir is projected to generate around $6 billion in revenue by 2028, with a stock price valued at 10x forward sales, this would place Palantir shares at around $30, which is below where they stand today.
However, SFC isn’t dismissing the company’s potential. “The company has a huge growth opportunity in enterprise AI software,” the investor notes, “but the growth rates aren’t as impressive as the valuation multiple would suggest.”
Also concerning for SFC, the company could experience quite a let down if for some reason it misses on any of its forecasted growth. “The concern now is that the stock already factors in those growth rates, while any hiccup in the business operations could leave investors with a 50% dip, or even more,” writes the investor.
Concluding with a note of skepticism, SFC writes, “Stock returns from the current price above $30 require Palantir to trade at extreme valuations,” ultimately rating Palantir a Sell. (To watch Stone Fox Capital’s track record, click here)
On Wall Street, the views are quite varied. Among the 14 analysts covering Palantir shares over the past three months, 3 recommend a Buy, 5 suggest a Hold, and 6 issue a Sell, resulting in a Hold consensus rating. However, the average 12-month price target of $22.42 indicates a potential decline of 17.5% from current levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
