Palantir stock will give way before climbing sharply
Data mining software company Palantir Technologies (NYSE: PLTR) began trading on the Big Board on September 30 following a direct public offering (DPO). In this direct listing, no new shares of the Palantir share were offered. Instead, existing shareholders were allowed to sell their shares to new investors. Source: Miscellaneous Photography / Shutterstock.com The New York Stock Exchange initially set a benchmark price of $ 7.25 per share, but on its first day of trading, Palantir stock opened at $ 10 and closed at 9 , $ 50. On November 27, Palantir stock hit a record high of $ 33.50 and is now flirting with $ 25 InvestorPlace – Stock Market News, Stock Advice & Trading Tips Denver-based Palantir was founded in 2003 by a group of executives led by Peter Thiel, founder of PayPal (NASDAQ: PYPL). He was also an early contributor to Facebook (NASDAQ: FB). Palantir’s initial work, especially with government agencies such as the Central Intelligence Agency (CIA), was viewed as controversial and even secret. 10 Hottest PSPCs Rating of 2020 in Preparation for the New Year Today’s article takes a look at what investors can expect from the company. Although the PLTR is relatively overvalued, investors with a long time horizon may view any pullback to $ 22.5 or even less as an opportunity to go long PLTR stocks. Here’s why. Government Contracts and Palantir Stock Since 2003, Palantir has expanded its customer base to other governments as private companies. For example, in November 2019, Palantir and Japanese insurer Sompo (OTCMKTS: SMPNY) formed a joint venture together. Then in June 2020, they launched the “Real Data Platform for Security, Health and Wellbeing”. Recent academic research by Roxana Akhmetova of the University of Oxford states that “the partnership is problematic” because Thiel is an adviser to Trump. In September, Palantir was awarded a three-year contract worth $ 44.4 million by the United States Food and Drug Administration (FDA). It will provide data management and analysis services to the FDA’s Center for Drug Evaluation and Research (CDER), which focuses on potential new drugs. In early December, Palantir announced cooperation with the Greek government. The country is working to improve its COVID-19 response efforts by incorporating more data and analysis into the decision-making process. Recently, Palantir developed a tool for the US government to track the manufacture of coronavirus vaccines as well as their distribution. The UK’s National Health Service has also worked with Palantir. Over the summer, CNBC reported that the UK NHS had given Palantir access to millions of private personal data of UK residents. Palantir recently signed a two-year contract with the NHS. It will now provide the organization with a software platform for processing data. In fact, a recent press release from the company points out that Palantir “supports a wide range of institutions as they respond to the COVID-19 pandemic and adapt for the future.” How Palantir’s Recent Revenue Came In In mid-November, Palantir released third quarter results. Revenue was $ 289.4 million, up 52% year-on-year. Net loss of $ 853.3 million converted to diluted net loss per share of 94 cents. As of September 30, the total cash and cash equivalents was $ 1.8 billion. Management raised the revenue forecast for the full year 2020 to a range of $ 1.070 billion to $ 1.072 billion, up 44% year-on-year. The company highlighted its international expansion in the quarterly release. Co-Founder and CEO Alexander C. Karp said, “Sompo’s work is vital to the well-being and security of Japan, and Kengo Sakurada, Group CEO of the company, has been a critical and trusted partner. as we work with Sompo to expand our reach in Asia. ”The forward P / E, P / S and P / B ratios for Palantir stock are 208.33, 42.58 and 37.0 respectively. PLTR are frothy, even for growth stocks capable of securing a significant number of government contracts. Considering the metrics, this is currently one of the more expensive software stocks on the street. P / E and P / B ratios for the SPDR S&P Software & Services ETF (NYSEARCA: XSW) are 30.62 and 6.63. The Bottom Line Palantir is a growth stock and has the potential to create value for shareholders for many years to come. However, it is highly valued and expensive. Therefore, investors Long term might consider buying the dips, especially if the price drops towards $ 22.50. Are you currently a shareholder? You can think of starting a covered buy position in the PLTR stock. Then you could possibly protect some of your paper profits. For example, an ATM covered call that expires January 15th would decrease portfolio volatility and provide some downside protection. Investors might also consider an exchange-traded fund (ETF) that also holds Palantir shares in its portfolio. Examples include Renaissance IPO ETF (NYSEARCA: IPO), First Trust US Equity Opportunities ETF (NYSEARCA: FPX), Vanguard Mid-Cap ETF (NYSEARCA: VO), Internet ARK Next Generation ETF (NYSEARCA: ARKW), or the BNY Mellon US Small Cap Core Equity ETF (NYSEARCA: BKSE). At the date of publication, Tezcan Gecgil did not hold (neither directly nor indirectly) any positions in the securities mentioned in this article. Tezcan Gecgil has worked in investment management for over two decades in the United States and the United Kingdom. His passion is options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up covered weekly calls to generate income and post educational content on investing. More from InvestorPlace Why Everybody’s Investing in 5G All Bad Top Stock Picker Reveals Next 1000% Winner Radical New Battery Could Dismantle Oil Markets Palantir Stock To Give Up Before It Gets Up markedly.