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Up 40% Since May, Is Palantir Still a Buy?

By Neil Rozenbaum - Jun 30, 2021 at 11:00AM

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Patience is key with this growth stock, but long-term investors will reap the benefits.

In this video I will be talking about Palantir (PLTR 0.00%) and why I still believe it's a must-have for long-term investors. Yes, you will be paying a premium, but I believe it's a premium worth paying. New contracts are announced frequently, Foundry is starting to gain some traction, and the private market is still untapped.

Growing fast

In Q1 2021, revenue grew 49% year over year, which helped to push adjusted operating income from last year's $16 million loss to a $117 million gain. Palantir posted $151 million in free cash flow in Q1, up $441 million year over year and representing a 44% margin. It's expected to be profitable this year for the first time.

Management predicts annual revenue growth of 30% or greater for 2021 through 2025, and with Foundry just getting started and the private market still untapped, that looks achievable.

Government contracts

It's no secret that Palantir likes to help the government and vice versa. The U.S. government was the first organization to back Palantir in the early 2000s. Palantir CEO Alex Karp publicly sided with the government, and that loyalty has helped Palantir land many government projects. In the recent Q1 report, management disclosed that U.S. government revenue had grown 83% year over year. 

In recent months Palantir signed various government contracts, such as: 

  • $111 million from U.S. Special Operations Command
  • $7.4 million from the CDC
  • $90 million from the National Nuclear Safety Administration
  • $18.4 million from the FAA
  • $32.5 million from the U.S. Space Force Command

With Palantir building up its reputation among government bodies, it won't be long until the private market starts contacting them. 

Private sector

As mentioned above, Foundry is starting to get some traction, and its ability to provide insights into massive data pools is making its way into the private sector. Pharmaceutical companies are using Palantir, turning data into insights to improve patients' lives and the efficiency of healthcare delivery. Bankers and insurers turn to Palantir to collect and analyze data to detect laundering and fraud. Automotive manufacturers such as Scuderia Ferrari are using Palantir to integrate and analyze performance data in order to make faster, more data-driven decisions. Aviation companies such as Airbus are using Palantir to simplify supply chains, saving costs and time.

Do watch the video below for the full insights.

*Stock prices used were the closing prices of June 29, 2021. The video was published on June 29, 2021.

Neil Rozenbaum owns shares of Palantir Technologies Inc. The Motley Fool owns shares of and recommends Palantir Technologies Inc. The Motley Fool recommends the following options: long December 2021 $130 calls on Ferrari. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Airbus Stock Quote
Airbus
EADSY
$27.67 (-0.97%) $0.27
Ferrari N.V. Stock Quote
Ferrari N.V.
RACE
$214.66 (-0.53%) $-1.15
Palantir Technologies Inc. Stock Quote
Palantir Technologies Inc.
PLTR
$9.91 (0.00%) $0.00

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