Palantir’s stock has reached an extreme valuation, with its share dilution adding more market value than many software companies last year alone. The AI big data firm issued 148 million additional shares, pushing its diluted share count to 2.56 billion and adding $28 billion in market value.
This growth is driven largely by stock options and RSUs granted to executives and top talent, which has created a value seven times the revenue target of $4.15 billion this year. Top investor Stone Fox Capital warns that this dynamic makes Palantir’s stock price excessive and reflects “dangerous optimism,” making it a high-risk bet for investors despite recent impressive growth.
In Q2, Palantir posted 48% year-over-year revenue growth, surpassing $1 billion for the first time, with US commercial sales soaring 93%. However, SFC argues that this growth is unsustainable and will slow as the company scales into the $5-10 billion range. Over the past five years, Palantir’s stock has rocketed 1870%, outpacing revenue growth of just 244%.
Investors should be cautious, as a setback could wipe out over 75% of the stock’s value. While SFC does not rule out further upside, it acknowledges that delving into Palantir’s stock is tantamount to playing with fire. The analyst rates PLTR shares a Strong Sell.
The analyst consensus calls Palantir a Hold (i.e., Neutral), with an average target price of $154.56, implying a ~13% drop over the next year.
Source: https://www.tipranks.com/news/playing-with-fire-says-top-investor-about-palantir-stock