Since the Palantir Technologies [PLTR] share price debuted on the Nasdaq last September, the stock has climbed 180.2% to close at $26.62 on 21 September 2021. With the one-year anniversary of the company’s IPO approaching on 30 September, how have its shares performed?
While the Palantir share price had initially rallied to a 52-week high of $45 during intraday trading on 27 January, the stock began a slow downtrend from there, falling dramatically throughout March and May. A recovery in June saw the Palantir share price rebound back up to the $27 mark. Despite the Palantir share price declining back down to the $21 mark in mid-July, the stock bounced back throughout August and September.
But compared to its peers, the Palantir share price is lagging. Since launching on 14 January, the Franklin Exponential Data ETF [XDAT], which tracks big data companies, has gained 11.9%. During that same period, the Palantir share price gained 6.8%. Palantir has a 1.14% weighting in the fund as of 20 September, while its top holding, Facebook [FB], has a 5.59% weighting and has driven the fund’s performance with gains of 40.37% since 14 January.
Over that same period, Palantir has also trailed behind the Nasdaq, which has gained 11.68% since 14 January. Looking at the year-to-date gives a better picture of Palantir’s performance, with its 13% rise more comparable to the Nasdaq’s 14.2%. Since its IPO, the Palantir share price’s gains far outweigh the Nasdaq’s 32.64% over the same period.
Palantir’s sending spree
The Palantir share price has broken out of a rounded bottom pattern over the past three months, with the 16 July trough at $21.37 followed by a breakout that gathered momentum on 12 August. On that day, the Palantir share price gained 11.36%, and volume jumped 445.82% compared to the previous day, as the stock surged past a $23 resistance level that had persisted since early July. The surge was driven by an earnings announcement that beat sales estimates by 4.17%.
Yahoo Finance analysts expect this trend to continue, with an average revenue estimate of $1.51bn for 2021, indicating 38.2% sales growth year-over-year. The equivalent figure for 2022 sees revenue growing another 29% to $1.95bn. Earnings are forecast to hit $0.16 this year and is expected to grow 31.25% to $0.21 in 2022.
Palantir's estimated revenue for 2022 - a 29% YoY rise
However, some analysts are concerned about the amount of money Palantir has pushed into potentially speculative ventures recently. The company has invested over £310m in SPACs and £33m in equity investments in three other corporations. The most recent round of these consists entirely of Palantir clients, and the company estimates the value of its contracts with these companies at $428m. While some view this as equivalent to IBM [IBM] or Hewlett Packard [HPE] providing vendor debt financing, others, such as Tyler Radke of Citi, think Palantir may be thinking too far outside the box. The company also recently invested $50.7m in gold bars.
Is Palantir’s share price a buy?
This scepticism over Palantir’s spending has translated into pessimism among the analyst community. Among six analysts offering 12-month price forecasts polled by CNN Money, the median target of $25 is 6.1% below Palantir’s most recent close, while even the most optimistic target of $31 only represents a 16.4% increase. Meanwhile, pessimists feel the Palantir share price could fall as much as 32.3% to $18. Four of the eight analysts polled by CNN Money gave Palantir a hold rating, with one recommending to buy and three rating it a sell.
The positive sales growth forecast is tipped to outstrip the 18% CAGR for the next two years at least, which a recent ReportLinker report forecasts for the big data industry between 2021-2025. Palantir’s earnings are expected to fall in 2021, from $0.19 per share in 2020 to $0.16 per share this year. CNN Money analysts predict total earnings per share for 2022 of $0.21, implying a total earnings growth of just 10.53% from this year. According to Yahoo Finance, Palantir has a forward P/E ratio of 126.43 — too high for many analysts to consider Palantir a buy.
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