In this segment of Motley Fool Live, recorded on Dec. 7, Fool contributors Toby Bordelon and Lou Whiteman discuss the growth prospects for Palantir (PLTR -0.23%) stock.
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Toby Bordelon: Maybe you can get them to 7, 8, maybe.
Lou Whiteman: Yeah, but give them 20 and the stock goes down from here.
Bordelon: Yeah, that's the problem. We're assuming either a very quick, fast sales growth or a very, very long runway of a lot of sales growth. Maybe it's there, but I would struggle with that too.
Whiteman: I think that's part of the answer, I think it's going to take a lot longer than people think, and I think that's the real takeaway for me.
Bordelon: That's a risk when you're dealing with a market that's sometimes doesn't want to be patient, that doesn't want to wait 20 years for something great to develop. That you look a year down the road, people are looking at this and saying, "Those aren't the growth rates that get us where we need to be in five years, so I'm out." That's the rest of the risk.
But it's hard to say, this is so tricky. It's so tricky to make an evaluation decision because you don't know how things are going to play out. I don't know, if you love the company, at some point, you got to say, "If I really, really, really do believe in this for the next decade, maybe I take a little bit, maybe I can get in here." But you do have to be careful like you say. Because with high-value companies, they're the risk of a big drop as we're seeing with many companies right now.
Whiteman: It's so hard to know. Maybe there's a catalyst, maybe they have a great quarter, but that's more, what I think, is just it's going to be a slow burn. Because I don't think they can magically come up with this wow growth in the next few quarters that are going to make people say, "Oh, wait. No. Thesis is justified."
I have a feeling with the apps and the catalyst, you just can't grow these things. You can't grow the government side of the business the way you can grow commercial. We have so many great tech data analytics companies in the Fool universe focused on commercial, where there's the whole Fortune 500 to go out and find or the Global 2,000.
You don't get that growth. You get a lot more stability and you get a lot more predictability, but you can't grow the defense business outside, so it's all on commercial. Again, they are selling a very, very, very nice Rolls Royce. But there's only so often that you need a Rolls Royce, especially if you're corporate IT department.
