Palantir has been Stuck in a Rut
This year has not been friendly to most of the popular growth names, and Palantir Technologies (NYSE:PLTR) has certainly not been spared. If you ask retail investors who are loyal to the stock, Palantir should be double or even triple its current price. Instead, Palantir has been stuck trading within range for the better part of 2021, which has been frustrating for shareholders who saw the stock gain 500% during the squeeze at the beginning of the year. The faster they climb the harder they fall. Palantir has not touched anywhere near its all-time high price of $45.00 since, but here’s why you should not be worried.
Palantir is a Sticky Company
Palantir may be an older company in terms of operations, but let’s keep in mind that the data analytics industry is only really gaining momentum as a mainstream market for the first time. Big data has been touted as the currency for the future, but that’s one of the main issues. Investors want gains now, but Palantir’s business is built on future potential. In the year it has been public Palantir has inked dozens of new contracts with both government agencies and non-government businesses. Most recently, Palantir has continued its expansion into the healthcare and biotechnology sector, by joining forces with Dewpoint Therapeutics. The partnership will see Dewpoint analyze and store data using Palantir’s Foundry platform, which will assist in future drug research.
This is the crux of Palantir’s bull argument: the more contracts and partnerships Palantir gains, the harder it is for companies to move away from its platforms. Gotham and Foundry are notoriously and deliberately sticky platforms which investors should love since it almost guarantees future contracts and higher recurring revenues. This is exactly what SaaS or Software as a Service companies are aiming for. Palantir has also upped its sales team considerably, as it looks to expand its influence in the consumer market. While Palantir is known for its heavy reliance on government contracts, the company has actively been trying to gain more clients in the private sector as well.
Palantir is a Long-Term Investment
Even CEO Alex Karp called Palantir’s stock a long-term investment. In just over a year of trading, the stock has doubled in price, which translates to a 100% return. Of course, this pales in comparison to the $45.00 highs it set earlier this year, but most investors would be ecstatic with a 100% return in 15 months. As Palantir inches towards profitability, the company reiterates its CAGR estimates to reach $4 billion in annual revenue by 2025. There is a lot to like about Palantir, and while you will certainly hear bearish sentiment surrounding the company, it is one of the most promising high growth names on the market today. Stocks often need to consolidate after getting out to a hot start, especially in a high profile public debut like Palantir’s was. Should we buy the dip? Sure, but this might not be a dip. It may be a couple more years until Palantir investors see the gains they expected to see right off the bat. Be patient, because Palantir is indeed a long-term investment. For those who can wait out the ups and downs, I believe they will be handsomely rewarded.
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