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Cindywcy
2022-05-25
boring
7 Safe Stocks to Buy and Hold Onto Forever
Cindywcy
2022-05-25
wait for price to drop lower than buy
Palantir: Just Overhyped And Unprofitable?
Cindywcy
2022-05-24
buy the dip
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13:21","market":"us","language":"en","title":"7 Safe Stocks to Buy and Hold Onto Forever","url":"https://stock-news.laohu8.com/highlight/detail?id=1171432369","media":"investorplace","summary":"When times get tough, investors should seek opportunities in safe stocks to buy and hold through thi","content":"<html><head></head><body><ul><li>When times get tough, investors should seek opportunities in safe stocks to buy and hold through thick and thin.</li><li><b>Apple</b>(<b><u>AAPL</u></b>) remains the king of stocks.</li><li><b>Amazon</b>(<b><u>AMZN</u></b>) is backed by the all-time best startup story.</li><li><b>Campbell Soup</b>(<b><u>CPB</u></b>) is a tank, even on most bad days.</li><li><b>Intel</b>(<b><u>INTC</u></b>) is a king among semiconductor companies.</li><li><b>Microsoft</b>(<b><u>MSFT</u></b>) is still dominant in PCs, cloud and gaming after decades of innovation.</li><li><b>Alphabet</b>(<b><u>GOOGL</u></b>) continues to play a huge role in our hyperconnected world.</li><li><b>JPMorgan Chase</b>(<b><u>JPM</u></b>) has proven resilience and it should continue to hold strong in the long run.</li></ul><p><img src=\"https://static.tigerbbs.com/c6f06865e864fc1f6bc8e15847ce12d0\" tg-width=\"1600\" tg-height=\"900\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/>Source: Shutterstock</p><p>If you follow the stock market, then you know the kind of volatility Wall Street is currently showing. Even the experts are finding it hard to make too many valid predictions. During such unstable times, investors should stick to what has worked for decades. This brings us to the idea of finding stocks to buy and hold forever. If the markets are wild, then we should to try and tame it.</p><p>The pandemic perhaps changed the short-term mindset of all traders. They have come to expect instant gratification. This is why we now have terms like a “V”-shaped recovery. The idea of buy-and-hold faded into the background — at least for now. I don’t think that we are ready to bury it, especially if we just modify it a bit.</p><p>Today’s list of stocks to buy includes nothing but “sure things.” The point is to eliminate all internal sources of variable of hiccups, leaving only extrinsic risks. This would make it nearly impossible to have a company flub cause pain to investors. I even omitted great stocks like<b>Tesla</b>(NASDAQ:<b><u>TSLA</u></b>) because of potential personality drama.</p><p>I am usually very hesitant to use the word “safe” when presenting investment ideas. If there were stocks that are completely safe, they would not pay a reward. So, let this be a disclosure that we are merely discussing<i>relative</i>safety, which isn’t foolproof.</p><table><tbody><tr><td><b>Ticker</b></td><td><b>Company</b></td><td><b>Current Price</b></td></tr><tr><td><b><u>AAPL</u></b></td><td>Apple</td><td>$143.11</td></tr><tr><td><b><u>AMZN</u></b></td><td>Amazon</td><td>$2,151.14</td></tr><tr><td><b><u>CPB</u></b></td><td>Campbell Soup</td><td>$46.16</td></tr><tr><td><b><u>INTC</u></b></td><td>Intel</td><td>$42</td></tr><tr><td><b><u>MSFT</u></b></td><td>Microsoft</td><td>$260.65</td></tr><tr><td><b><u>GOOGL</u></b></td><td>Alphabet</td><td>$2,072.08</td></tr><tr><td><b><u>JPM</u></b></td><td>JPMorgan Chase</td><td>$124.60</td></tr></tbody></table><h2>Apple (AAPL)</h2><p>We cannot have a safe stocks to buy list and not include the king of stocks <b>Apple</b>(NASDAQ:<b><u>AAPL</u></b>). Arguably it is the best company on the planet, with special brand powers. Its clientele is amazingly loyal and price is almost never a problem. I am not a die hard fan, but I too agree it is a gem of an equity to own. Therefore, it must be part of this list of sure things.</p><p>However, I hesitate to own my entire position right away. This is only because of AAPL stock’s relative altitude to the summer 2020 levels. That’s when the markets really broke out with the tailwind from the stimulus. I expect that the bears will try to deflate more of it before it finds a true floor. I realize that it has already corrected 25% from its highs. But it is still 40% above the breakout neckline.</p><p>While this is not a reason to short it, it’s worth waiting it out a bit. Besides, there are other members of this list that have already shed this 2020 rally froth. Meanwhile, its financial metrics are beyond reproach. There isn’t a blemish on them, so don’t waste your time looking.</p><h2>Amazon (AMZN)</h2><p>The growth that <b>Amazon</b>(NASDAQ:<b><u>AMZN</u></b>) accomplished in the last five years is astonishing. This is a one of a kind story that will likely never happen again. If there is one doubt about it being on the list of stocks to buy and hold is its new leader. Founder Jeff Bezos handed the reins over to a new team.</p><p>I am being paranoid, because it is likely that the Amazon machine will continue to excel regardless. The momentum it has is substantial, so it will take a lot of trepidation to die. The world is going through a rough patch coming out of the pandemic. The virus caused a human tragedy, but the policies that came out of it brought complete chaos.</p><p>Central banks are trying to slow this pendulum down, but my bet is that they will mess it up. They will overshoot and perhaps inflict near-term pain. If so, then AMZN stock nears $1,800 would be a bargain stock to buy for a long term.</p><h2>Campbell Soup (CPB)</h2><p>When people are sick, the old adage suggests eating soup. When the indices are on the fritz, often <b>Campbell Soup</b>(NYSE:<b><u>CPB</u></b>) stock offers a safe haven. Meanwhile, when the bulls are in charge it too participates with the upside to a degree. Therefore, this makes it the perfect stock to own through the proverbial thick and thin.</p><p>In addition to the relative overall calmness, CPB stock also rewards its owners with some extra cash. The 3% dividend payout is a nice source for fixed income in this low rate environment. The company’s fundamentals are as boring as they get. Perhaps this is what makes it perfect for a list of safe stocks to buy and hold forever.</p><p>For the last seven years, the profit and loss statement barely budged. Despite that, according to<i>Yahoo Finance</i>,its value grew. CPB still maintains a current 15x price-to-earnings ratio, which is its lowest since 2015.</p><h2>Intel (INTC)</h2><p>The digital revolution has never been stronger, partly because the pandemic put it in high gear. So the world will need chips to power the tech that is taking over the world. The leader in that is currently <b>Intel</b>(NASDAQ:<b><u>INTC</u></b>), even though <b>Advanced Micro Devices</b>(NASDAQ: <b><u>AMD</u></b>) and <b>Nvidia</b>(NASDAQ:<b><u>NVDA</u></b>) are hogging the headlines. Eventually, investors will know a good thing even if it’s too late.</p><p>So far, INTC managed to stay on top for decades, and it should continue to do so for a long while. As for timing, INTC stock is at the low end of the range since 2014. I bet that there are buyers lurking from these levels and into $40 per share. Even though it could go lower, it would then become a slam dunk BUY.</p><p>Intel’s top line metrics don’t stack up to AMD or NVDA, but they have impressive bottom line upside. Net income has now more than doubled since 2015, without inflating the valuation proposition. The current 12 month P/E ratio is about half of then.</p><h2>Microsoft (MSFT)</h2><p><b>Microsoft</b>(NASDAQ:<b><u>MSFT</u></b>) stock is a staple on Wall Street. It rose to fame during the breakout of the digital revolution decades ago. If we include Apple in a list of stocks to buy, then we must also include MSFT. They were bitter rivals,even “frenemies”one could say.</p><p>Under the leadership of ex-CEO Steve Ballmer, the outlook was a bit murky. Satya Nadella steered that ship straight into the proper favorable tech currents. The company not only switched to a subscription service for the office suites, but it is also aiming to take a huge chunk of the cloud. Furthermore, with its recent acquisition of <b>Activision</b>(NASDAQ:<b><u>ATVI</u></b>), it can also become a gaming powerhouse.</p><p>Perhaps this would also be a gateway to the metaverse. Clearly, MSFT is doing its best to keep up with the times and stay relevant. There is no reason to doubt it now. I do caution a bit about its distance to the June 2020 breakout. At this altitude, it can easily lose another 15% before finding real support. But this is a good place to start a multiple entry point position for the long term.</p><h2>Alphabet (GOOGL)</h2><p>Safety often comes from size, and not many are larger than <b>Alphabet</b>(NASDAQ:<b><u>GOOG</u></b>, NASDAQ:<b><u>GOOGL</u></b>). It is also operationally in control of so many lives, including mine. The android operating system is the most ubiquitous smart phone globally, so it hasmore users than anyone else.</p><p>Social media changed the world, and I bet it is here to stay. For this I struggled with picking between GOOGL and <b>Meta Platforms</b>(NASDAQ:<b><u>FB</u></b>). I chose Alphabet because of its command of android and <b>YouTube</b>. Also, more recently,it announced the resurgence of wearable products. The idea of augmented reality sounds lucrative in the mid term. The company has all the tools it needs to dominate it.</p><p>Alphabet already made this transition from desktop search monster to mobile. I bet it can make another leap to whatever comes next. The proof of Alphabet’s success is obvious in its financial reports. Alphabet grew sales 2.5 times in just five years. Meanwhile, its net income grew twice as fast in the same time. These impressive accomplishments should give investors confidence that GOOGL belongs on the list of stocks to buy and hold forever.</p><h2>JPMorgan (JPM)</h2><p><b>JPMorgan’s</b> (NYSE:<b><u>JPM</u></b>) management has navigated the toughest of tests since the 2008 debacle. It has emerged stronger than ever and now has a fortress balance sheet. JPM stock has strong financial reports backing up its position on this list of stocks to buy. While revenue growth isn’t great, it has grown its net income significantly. JPMorgan has earned the trust of investors, so I have no reason to doubt that it can maintain its strength.</p><p>The caveat here is that now the Federal Reserve’s actions are likely to put a serious hurt on its metrics. The tightening measures the central bank strike at the heart of JPM’s business. Therefore, I expect potential calamities during their next few quarter reports. So investors would be wise to temper the enthusiasm short term and try to get in at a lower price.</p><p>JPM stock has already lost 23% of its value this year, but it could fall half as much more from here. Buying all in now would defeat the purpose of this list. Being part of a list of stocks to buy and hold doesn’t mean we do it blindly. There are levels that are easy marks for the bears to hit.</p></body></html>","source":"lsy1606302653667","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>7 Safe Stocks to Buy and Hold Onto Forever</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n7 Safe Stocks to Buy and Hold Onto Forever\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-25 13:21 GMT+8 <a href=https://investorplace.com/2022/05/7-safe-stocks-to-buy-and-hold-onto-forever/><strong>investorplace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>When times get tough, investors should seek opportunities in safe stocks to buy and hold through thick and thin.Apple(AAPL) remains the king of stocks.Amazon(AMZN) is backed by the all-time best ...</p>\n\n<a href=\"https://investorplace.com/2022/05/7-safe-stocks-to-buy-and-hold-onto-forever/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软","INTC":"英特尔","CPB":"金宝汤","AAPL":"苹果","GOOGL":"谷歌A","JPM":"摩根大通","AMZN":"亚马逊"},"source_url":"https://investorplace.com/2022/05/7-safe-stocks-to-buy-and-hold-onto-forever/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1171432369","content_text":"When times get tough, investors should seek opportunities in safe stocks to buy and hold through thick and thin.Apple(AAPL) remains the king of stocks.Amazon(AMZN) is backed by the all-time best startup story.Campbell Soup(CPB) is a tank, even on most bad days.Intel(INTC) is a king among semiconductor companies.Microsoft(MSFT) is still dominant in PCs, cloud and gaming after decades of innovation.Alphabet(GOOGL) continues to play a huge role in our hyperconnected world.JPMorgan Chase(JPM) has proven resilience and it should continue to hold strong in the long run.Source: ShutterstockIf you follow the stock market, then you know the kind of volatility Wall Street is currently showing. Even the experts are finding it hard to make too many valid predictions. During such unstable times, investors should stick to what has worked for decades. This brings us to the idea of finding stocks to buy and hold forever. If the markets are wild, then we should to try and tame it.The pandemic perhaps changed the short-term mindset of all traders. They have come to expect instant gratification. This is why we now have terms like a “V”-shaped recovery. The idea of buy-and-hold faded into the background — at least for now. I don’t think that we are ready to bury it, especially if we just modify it a bit.Today’s list of stocks to buy includes nothing but “sure things.” The point is to eliminate all internal sources of variable of hiccups, leaving only extrinsic risks. This would make it nearly impossible to have a company flub cause pain to investors. I even omitted great stocks likeTesla(NASDAQ:TSLA) because of potential personality drama.I am usually very hesitant to use the word “safe” when presenting investment ideas. If there were stocks that are completely safe, they would not pay a reward. So, let this be a disclosure that we are merely discussingrelativesafety, which isn’t foolproof.TickerCompanyCurrent PriceAAPLApple$143.11AMZNAmazon$2,151.14CPBCampbell Soup$46.16INTCIntel$42MSFTMicrosoft$260.65GOOGLAlphabet$2,072.08JPMJPMorgan Chase$124.60Apple (AAPL)We cannot have a safe stocks to buy list and not include the king of stocks Apple(NASDAQ:AAPL). Arguably it is the best company on the planet, with special brand powers. Its clientele is amazingly loyal and price is almost never a problem. I am not a die hard fan, but I too agree it is a gem of an equity to own. Therefore, it must be part of this list of sure things.However, I hesitate to own my entire position right away. This is only because of AAPL stock’s relative altitude to the summer 2020 levels. That’s when the markets really broke out with the tailwind from the stimulus. I expect that the bears will try to deflate more of it before it finds a true floor. I realize that it has already corrected 25% from its highs. But it is still 40% above the breakout neckline.While this is not a reason to short it, it’s worth waiting it out a bit. Besides, there are other members of this list that have already shed this 2020 rally froth. Meanwhile, its financial metrics are beyond reproach. There isn’t a blemish on them, so don’t waste your time looking.Amazon (AMZN)The growth that Amazon(NASDAQ:AMZN) accomplished in the last five years is astonishing. This is a one of a kind story that will likely never happen again. If there is one doubt about it being on the list of stocks to buy and hold is its new leader. Founder Jeff Bezos handed the reins over to a new team.I am being paranoid, because it is likely that the Amazon machine will continue to excel regardless. The momentum it has is substantial, so it will take a lot of trepidation to die. The world is going through a rough patch coming out of the pandemic. The virus caused a human tragedy, but the policies that came out of it brought complete chaos.Central banks are trying to slow this pendulum down, but my bet is that they will mess it up. They will overshoot and perhaps inflict near-term pain. If so, then AMZN stock nears $1,800 would be a bargain stock to buy for a long term.Campbell Soup (CPB)When people are sick, the old adage suggests eating soup. When the indices are on the fritz, often Campbell Soup(NYSE:CPB) stock offers a safe haven. Meanwhile, when the bulls are in charge it too participates with the upside to a degree. Therefore, this makes it the perfect stock to own through the proverbial thick and thin.In addition to the relative overall calmness, CPB stock also rewards its owners with some extra cash. The 3% dividend payout is a nice source for fixed income in this low rate environment. The company’s fundamentals are as boring as they get. Perhaps this is what makes it perfect for a list of safe stocks to buy and hold forever.For the last seven years, the profit and loss statement barely budged. Despite that, according toYahoo Finance,its value grew. CPB still maintains a current 15x price-to-earnings ratio, which is its lowest since 2015.Intel (INTC)The digital revolution has never been stronger, partly because the pandemic put it in high gear. So the world will need chips to power the tech that is taking over the world. The leader in that is currently Intel(NASDAQ:INTC), even though Advanced Micro Devices(NASDAQ: AMD) and Nvidia(NASDAQ:NVDA) are hogging the headlines. Eventually, investors will know a good thing even if it’s too late.So far, INTC managed to stay on top for decades, and it should continue to do so for a long while. As for timing, INTC stock is at the low end of the range since 2014. I bet that there are buyers lurking from these levels and into $40 per share. Even though it could go lower, it would then become a slam dunk BUY.Intel’s top line metrics don’t stack up to AMD or NVDA, but they have impressive bottom line upside. Net income has now more than doubled since 2015, without inflating the valuation proposition. The current 12 month P/E ratio is about half of then.Microsoft (MSFT)Microsoft(NASDAQ:MSFT) stock is a staple on Wall Street. It rose to fame during the breakout of the digital revolution decades ago. If we include Apple in a list of stocks to buy, then we must also include MSFT. They were bitter rivals,even “frenemies”one could say.Under the leadership of ex-CEO Steve Ballmer, the outlook was a bit murky. Satya Nadella steered that ship straight into the proper favorable tech currents. The company not only switched to a subscription service for the office suites, but it is also aiming to take a huge chunk of the cloud. Furthermore, with its recent acquisition of Activision(NASDAQ:ATVI), it can also become a gaming powerhouse.Perhaps this would also be a gateway to the metaverse. Clearly, MSFT is doing its best to keep up with the times and stay relevant. There is no reason to doubt it now. I do caution a bit about its distance to the June 2020 breakout. At this altitude, it can easily lose another 15% before finding real support. But this is a good place to start a multiple entry point position for the long term.Alphabet (GOOGL)Safety often comes from size, and not many are larger than Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL). It is also operationally in control of so many lives, including mine. The android operating system is the most ubiquitous smart phone globally, so it hasmore users than anyone else.Social media changed the world, and I bet it is here to stay. For this I struggled with picking between GOOGL and Meta Platforms(NASDAQ:FB). I chose Alphabet because of its command of android and YouTube. Also, more recently,it announced the resurgence of wearable products. The idea of augmented reality sounds lucrative in the mid term. The company has all the tools it needs to dominate it.Alphabet already made this transition from desktop search monster to mobile. I bet it can make another leap to whatever comes next. The proof of Alphabet’s success is obvious in its financial reports. Alphabet grew sales 2.5 times in just five years. Meanwhile, its net income grew twice as fast in the same time. These impressive accomplishments should give investors confidence that GOOGL belongs on the list of stocks to buy and hold forever.JPMorgan (JPM)JPMorgan’s (NYSE:JPM) management has navigated the toughest of tests since the 2008 debacle. It has emerged stronger than ever and now has a fortress balance sheet. JPM stock has strong financial reports backing up its position on this list of stocks to buy. While revenue growth isn’t great, it has grown its net income significantly. JPMorgan has earned the trust of investors, so I have no reason to doubt that it can maintain its strength.The caveat here is that now the Federal Reserve’s actions are likely to put a serious hurt on its metrics. The tightening measures the central bank strike at the heart of JPM’s business. Therefore, I expect potential calamities during their next few quarter reports. So investors would be wise to temper the enthusiasm short term and try to get in at a lower price.JPM stock has already lost 23% of its value this year, but it could fall half as much more from here. Buying all in now would defeat the purpose of this list. Being part of a list of stocks to buy and hold doesn’t mean we do it blindly. There are levels that are easy marks for the bears to hit.","news_type":1},"isVote":1,"tweetType":1,"viewCount":380,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9022322003,"gmtCreate":1653480994502,"gmtModify":1676535289356,"author":{"id":"4097322786112660","authorId":"4097322786112660","name":"Cindywcy","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4097322786112660","authorIdStr":"4097322786112660"},"themes":[],"htmlText":"wait for price to drop lower than buy","listText":"wait for price to drop lower than buy","text":"wait for price to drop lower than buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9022322003","repostId":"2238553638","repostType":4,"repost":{"id":"2238553638","kind":"news","pubTimestamp":1653471600,"share":"https://ttm.financial/m/news/2238553638?lang=&edition=fundamental","pubTime":"2022-05-25 17:40","market":"us","language":"en","title":"Palantir: Just Overhyped And Unprofitable?","url":"https://stock-news.laohu8.com/highlight/detail?id=2238553638","media":"Seekingalpha","summary":"SummaryI take a side-step from my typical valuation stock/DGR investing to heed a member and client ","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>I take a side-step from my typical valuation stock/DGR investing to heed a member and client request; to look at Palantir through my lens of investing.</li><li>I've long been interested in Palantir because I understand the procurement/governmental side of the business due to my career.</li><li>However, Palantir has problems. It's my view that the company is not investable, even at this valuation.</li><li>Palantir is a great example of a great business idea being uninvestable due to a materially unattractive cost structure.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/58c58fa9a9fea9040328236b6e760355\" tg-width=\"1080\" tg-height=\"720\" width=\"100%\" height=\"auto\"/><span>Michael Vi/iStock Editorial via Getty Images</span></p><p>I've long followed Palantir (NYSE:PLTR), in the way that one would follow something interesting from the periphery of one's vision. I've never engaged with or been close to considering investing In the business. Thereason is that it doesn't really fulfill any of my targets as far as investments go.</p><p>However, just because I don't follow or consider a company good, doesn't mean it's not a good investment. Palantir has always been an interesting business because it works in a field where I myself have worked - only on the other side. Mission-critical digital infrastructure.</p><p><i>It's an appealing field.</i>There's zero doubt about it. Governments need it, and companies need to provide it. Most of the organizations I worked for before my career as an analyst still ran their systems on system backbones constructed in the mid-90s, which when used in 2017 was akin to strapping a rocket engine to a donkey.</p><p>In this article, we'll do an A to Z.</p><p>If you like Palantir, it's likely you won't like my conclusion.</p><p>But I respectfully request that you, if you mean to leap in and defend Palantir, first take the time and look at the arguments.</p><p>Ready? Let's get going.</p><p><b>Palantir - From A to Z</b></p><p>Palantir is<i>not</i>a freshly started tech growth stock. Palantir Technologies is an unprofitable tech company that was founded<i>after the dot-com bubble in 2003.</i></p><p>Many, many companies in the tech sector have gone from being startups to being profitable blockbusters in that time. Amazon (AMZN) is one of them. The first misconception is that Palantir is a "new" sort of company, but the fact is that it celebrates 20 years next year.</p><p>The company has some heavyweight names behind it. The founder and Chairman of the business is Peter Thiel, co-founder of PayPal (PYPL), initially as a company to<i>use PayPal's fraud recognition systems to reduce terrorism while preserving civil liberties.</i></p><p>Now, that's a mouthful - and unclear.</p><p>Today, Palantir does a few things, but we need to consider the company's operations on a high level - otherwise, they quickly become what's known as "technobabble" among those of us watching science-fiction.</p><p><i>Palantir enables organizations to transform large amounts of information into forms/assets that make sense for their workflows/organizations.</i></p><p>They do this through one of three principal software platforms:</p><ul><li><i>Gotham,</i>enables users to<i>identify patterns,</i>as well as helping to plan and execute real-world responses to threats that have been identified within the platform. In essence, the software identifies patterns that could be viewed as threats and allows government institutions to formulate effective responses.</li><li><i>Foundry</i>creates a central operating system (OS) for data, allowing users to integrate and analyze data in one location. This allows organizations to test new ideas and track data in a way that's not possible in as simple a manner with legacy operating systems or software.</li><li><i>Apollo</i>is essentially a software delivery system that can handle cloud delivery, on-premise or more advanced deliveries. Apollo delivers both software and updates, both the company's and customers' own updates.</li></ul><p>For someone not versed in governmental issues and challenges, even with this very short description, it might be hard to see what good this does the customers.</p><p><b>Examples are a must. Here are 2.</b></p><ul><li>Palantir is used by<i>Airbus (EADSY) and the aviation industry.</i>It initially started off as an A350 Production software but grew into Skywise, the central OS for the entire airline industry. The company's software connects 9,000 planes from 100 operators, and Palantir's systems are used to assist in the design, manufacture, servicing, operations, and maintenance of global airline fleets.</li><li>Utilities such as<i>Pacific Gas & Electric (PG&E)</i>use the company's software in a central hub that could organize and analyze billions of data points every single day. Through Foundry, the company is presented with a complete picture of its operating grid, combining geospatial location, equipment health, and topology to answer questions regarding when to perform preventative maintenance and the like. Foundry has also been integrated in the process of switching off/on its system at critical junctures.</li></ul><p>This presents, in an effective manner, why the company's products and services are attractive to its consumers.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8ec9b9affe6c176c14826c624563d5b0\" tg-width=\"640\" tg-height=\"335\" width=\"100%\" height=\"auto\"/><span>Palantir Presentation (Palantir IR)</span></p><p>This sort of business model is very reliant on<i>effective sales and marketing.</i>These systems have extremely costly installation costs, high complexity, and very long sales cycles. Customer acquisition is complex and costly, even if these facts raise the entry barriers and moats in comparison to the competition.</p><p>The fact that there's a very long history of failures in large-scale ERP system integration, and costly ones, are warning cases for customers and Palantir as well. This includes use cases such as Waste Management's (WM) $500M ERP failure, and military ERP integration failures of twice that amount. It's no surprise from these failures that institutions are extremely leery about implementing large-scale solutions and have become cautious to invest. So, one of the main challenges for Palantir is indeed overcoming this, and the track record that the company has with governments and megacorps spells out, in a very real way, that the company is succeeding in this.</p><p>One confirmation of this was the way Palantir worked with the NSH to track the progress of COVID and contain the pandemic. Palantir also developed Tiberius, a software for vaccine allocation used in the United States and got a contract with the Food and Drug Administration in the US back in 2020.</p><p>Some fresh stats.</p><p><i>58%</i>of the $1.5B in revenues generated in 2021 came from Government, the rest from the Commercial segment.<i>57%</i>came from US domestic customers, 43% from abroad.</p><p>Average RPC (Revenue per Customer) on a TTM was $6.5M, which is down YoY, with the top twenty customers at an average of $43.6M, quite a bit above that, and up YoY. What this means is that big customers are becoming more important to the company.</p><p><i>Fundamentally,</i>Palantir does not have a credit rating. It also hasn't posted positive GAAP EPS at any point as of this time.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/70f70c9ed78a8eaf4f83a3857225106a\" tg-width=\"640\" tg-height=\"274\" width=\"100%\" height=\"auto\"/><span>Palantir GAAP EPS (TIKR.com)</span></p><p>For the past quarter, with the latest 1Q22 highlights, the company focuses a great deal on the impressive numbers in its revenues. And indeed, in terms of sales revenues, commercial revenues (domestic especially), an increased customer count, and other sales positives.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/de38bee0d98e19141a059418ca1df8d5\" tg-width=\"640\" tg-height=\"281\" width=\"100%\" height=\"auto\"/><span>Palantir 1Q22 Presentation (Palantir IR)</span></p><p>The company also posts a supposed "adjusted OM" of 26%. Given the number and type of adjustments, I consider these to be near-irrelevant in a profitability context. GAAP OM is negative 9% even with these absolutely superb revenue growth numbers. What this means is that despite record customer growth and record interest for the company's services, the company as of yet fails to turn a single dollar of GAAP profit.</p><p>The company speaks of TAM expansion, with large addressable markets overall. The one positive takeaway that I see is that theoretically, given the OM improvement from revenues is that there is a theoretical point when the company<i>could</i>turn GAAP EPS positive if the customer growth is high enough.</p><p>The company keeps adding customers and impressive contracts. The company's appeal and ability to add customers to its roster across the globe is not the question.<i>The profitability with which the company does this is in question.</i></p><p>Everywhere Palantir reports, the company speaks of revenues, customer counts, contracts, deals closed, billings, and "adjusted" margins. The company's guidance numbers<i>strictly</i>focus on adding revenues, and adjusted sort of margins.</p><p>The company knows well its challenge of becoming a GAAP-profitable business.</p><p><b>How bad is it?</b></p><p>I view it as "pretty bad". Numbers and visual representations of numbers speak louder than words.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f156814bcae6199f997f950293378c58\" tg-width=\"640\" tg-height=\"277\" width=\"100%\" height=\"auto\"/><span>Palantir - Profitability/Shares Outstanding (TIKR.com)</span></p><p>Palantir has failed to produce positive EBITDA, and positive Operating income, and has recorded massive increases in share count due to substantial SBC over the past few years. The impact of SBC can best be understood by taking look at the gross profit numbers, including SBC.</p><p>Overall, Palantir has recorded over $2B of SBC in FY20 and FY21, which can be compared to FY20 and FY21 sales revenues of around $2.6B - a fairly exorbitant amount by any standard.</p><p>I went through the results of excessive SBC in my article on Twilio (TWLO). SBC isn't a problem - but it cannot be ignored as a cost, as some are wont to do. It needs to be added back, and this means that SBC is a drag on company profits - as any expense is supposed to be.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0a18ebd7c8e030c1fc9e52ea4e71c875\" tg-width=\"640\" tg-height=\"332\" width=\"100%\" height=\"auto\"/><span>Palantir Presentation (Palantir IR)</span></p><p>One of the main problems with Palantir's SBC is that management, as of yet, hasn't issued any sort of guidance as to these expenses or their plan for them, which obviously leaves investors in a bit of limbo. This is especially problematic given that Palantir has lost more than 58% of its value since December of 2021, and now trades <i>below $8/share.</i></p><p>Imagine if part of your comp was SBC, and you've lost around 50% of that value in less than 5 months. Pretty brutal, regardless of whom you are. Also, a large part of that SBC is being granted to management.</p><p>Plenty of contributors viewed the SBC as a non-issue in 2021, arguing that the company is about to deliver on multimillion projects which could leave them in a labor lurch if engineers were to leave, which can be prevented with appealing SBC packages. I personally don't believe, given share price performance and how the SBC is split among the employees, that this acts as a big motivator anymore. You could make an argument that Palantir should be attractive as an insider buying target here.</p><p><i>Evidence suggests otherwise.</i>Executives and insiders are selling their stocks as soon as they can, and there haven't been registered insider buys for a very long time.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e80192d3d629a212bed9b6c9972d8d6d\" tg-width=\"640\" tg-height=\"399\" width=\"100%\" height=\"auto\"/><span>Palantir insider trades (MarketBeat)</span></p><p>So, Insiders are telling you that "I don't like this price". Not at $20/share. Not at $10/share. Not even at $9/share. If the people going to work every day aren't willing to hold onto their shares, why should you want to buy the company at this price?</p><p>So, concluding this, I argue that while the company is skilled at presenting us with revenue increases, new clients, new contracts, and interesting case studies,<i>the math still doesn't work.</i></p><p>The numbers are <i>awful.</i></p><p>Operational Challenges...</p><p>A core issue that Palantir is facing is the growth on the commercial side of the business, versus the much-lauded governmental business side of the business. It's this which for a long time has been called the differentiator between PLTR and other companies. Governmental growth has been the argument for investing in the business, in that the growth here is going to be/could be in the triple digits, but the trend has actually gone the other way, down to only 16% government-specific revenue growth for the latest quarter. That same number was 76% a year ago.</p><p>As I mentioned above, governmental contracts account for the majority of the company's revenue. A slowdown here is serious business, and it's being underestimated by bullish contributors on the company, not even starting to mention some of the math that doesn't work.</p><p>Yeah, commercial revenues are on the rise, but part of the bull thesis has always been that governmental, long-cycle, massive-contract-value appeal. If the company is now starting to focus on smaller contract value, commercial-type contracts, that could prove dilutive to the company's margins. SG&A is already at significant levels, and as I mentioned - these companies need excellent salespeople.</p><p>I watch a lot of Shark Tank, as I'm sure some of you do as well. And I can't help but think that when I watch this company and dig through its numbers, I feel a bit like Marc Cuban or Kevin O'Leary telling someone that<i>your business model doesn't work.</i></p><p>If you continually adjust your profitability metrics by excluding or adding certain items but are never profitable on any metric that actually matters, you don't have a profitable business. You have a business - but not a profitable one.</p><p><b>Palantir keeps losing money.</b></p><p>The net loss for 1Q22 alone was over $100M. If we follow these losses in the accumulated deficit item in the balance sheet, we learn that Palantir has accumulated $5.6B as of 1Q22. That's around 33% of its entire market capitalization.</p><p>The problem is, as I say - operating expenses. Operating expenses are a collection of expenses including things like Sales, Marketing, payroll, admin, overhead, and so forth.</p><p><b>And Palantir is failing to get these right.</b></p><p>Business 101: if your operating expenses are higher than your revenues, that means you are<i>losing money on a per-sale basis.</i></p><p>If this becomes a trend, all you're doing on a per-sale basis is adding new losses to that accumulated deficit. If shareholders, financiers, or the market keeps propping you up, well, you can go right ahead and keep financing and working your business, continually operating at a loss.</p><p>On a per-dollar level in sales, the company is spending 39 cents for every dollar made in sales, in Sales/marketing.</p><p>That's insane. It's at a level where Mr. O'Leary if someone came to him with the idea, would say that the time has come for you to take your business idea behind the barn and shoot it. Palantir has been completely unable to bring these down. They've remained over 35% for<i>years.</i>And management has yet to give any concrete plan for bringing this down.</p><p>Remember, even if they started bringing it down, they'd have to<i>break even</i>before we can start talking about GAAP Profit. As of right now, I don't even see a way for the company to actually break even on a GAAP basis.</p><p><b>...and doubts about Scalability...</b></p><p>When you operate a highly specialized business, your expertise and tailoring your product specifically to consumers is incredibly important and difficult. It takes time. You're not selling a $1.49 widget at a store; you're convincing a customer to adopt a highly specialized solution.</p><p>High CAC (Customer Acquisition Costs) or sales/marketing costs compared to income or sales revenue are typically indicative of advanced products that require a great degree of marketing and tailoring. This is not an issue in itself - it becomes an issue when the argument is for this to be scalable. Because if you're losing money on every sale now, there really isn't an argument to be made for the scalability of its sales models that could produce a positive profit.</p><p><i>But Wolf Report,</i>you might say -<i>surely you can't just use a method that would be used on a $50k startup when viewing Palantir? They're wildly different businesses, and Palantir has a market capitalization of over $15B!</i></p><p>They do. They have a massive market cap, and they've done very impressive things.</p><p>They've done very impressive things, except the one thing that I care about -<i>they haven't generated positive GAAP EPS.</i></p><p><b>...leading to question the company's fundamental existence</b></p><p>What I love about investing is that it's a binary sort of thing. It's a Yes/No- thing.</p><p>You either have profit, or you haven't. I don't allow for senseless and whitewash adjustments. Palantir hasn't made a profit, and I don't see any indication that it's going to turn a profit this year either.</p><p>Palantir suffers from what typically is the Achilles heel in a startup - not a $15B tech giant -<i>Optimism.</i></p><p>The company and the bullish contributors are so in love with the company's ideas, products, and services. They're so very convinced, that this is needed. This is something the world, that companies, and governments, desperately need.</p><p><b>And you know what?</b></p><p><i>Palantir is absolutely right. The bulls are absolutely right. The world, the governments, and organizations need such products.</i></p><p>You will not find me arguing with this. As I mentioned, I worked on this equation, in procurement. I would have been thrilled beyond the moon to be able to take advantage of their excellent offerings.</p><p><b>Why?</b></p><p>Because Palantir has no real peers. I've looked. No company does what Palantir does, not to the degree. Oh, there are businesses like Tyler Technologies (TYL), Verint (VRNT), and Splunk (SPLK) - but none offer the sort of comprehensive solution that is Gotham, Foundry, and Apollo.</p><p><i>The problem is</i>- and I want to drill this home with the sort of fervor of slamming a gavel into the tabletop again and again -<i>you are not doing so profitably.</i></p><p>What right does a company have to exist, that is unable to generate acceptable GAAP profits in near-on 20 years?</p><p>How long should patient shareholders wait before carefully knocking on Palantir's door and asking;<i>"Y'know, I lent you some money a few years back, any idea when I can start seeing some return on that?"</i></p><p>A company that does not generate profits is not a company with a future. It's either a charity or a company that does not deserve to survive.</p><p><b>The solution</b></p><p>Become profitable.</p><p>Quite an obvious solution there, but it's really the only thing that can be said. Palantir is focusing on acquiring new customers and adding new contracts - when every sale they make adds more losses, not profits, to their balance sheets.</p><p>What the company needs to do is one of two things - or preferably a combination of both.</p><ul><li><i>Cut Expenses</i></li><li><i>Raise prices</i></li></ul><p>And speaking of someone from the government, I can tell you that one of the least interesting points when we were procuring specialized solutions, was actually pricing. Fit, ease of use, and scalability were far more important. I'm not claiming to have enough insight into the business that I know what the company "should" charge, beyond saying that Palantir needs to charge more for their products and services. This is in part because I believe it will be hard to cut SG&A from the company's process due to the highly specialized nature of sales.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6f47371dc88953f0a08fc6aa2134a316\" tg-width=\"640\" tg-height=\"344\" width=\"100%\" height=\"auto\"/><span>Palantir Presentation (Palantir IR)</span></p><p>Palantir isn't profitable. Palantir needs to become profitable. There are only two ways to do that. Either spend less or earn more.</p><p>But earning more while maintaining a cost structure that results in losses, not profits, is not a way to go about it.</p><p>The obvious result of such a strategy, in the end, is that Palantir will keep dropping. Remember, as interest rates rise, debt will become increasingly more expensive. The company will have to raise capital, and issue equity at more and more expensive levels.</p><p>In the end, it will all come to its natural conclusion.</p><p>The company will either become defunct, or it will be chopped up and sold for parts. I personally believe that the company's products are <b>solid</b> and would probably make for excellent assets in someone's business - though I do not argue for investing in Palantir as an M&A target.</p><p>Bulls focus on revenues, sales, and contracts.<i>This is the wrong focus.</i>Before you can start to focus on growing the business, or the product, you must ask yourself -<i>do you have a working business model?</i></p><p>A working business model entails<i>making money</i><b>.</b>Palantir does not.</p><p><i>Ipso Facto</i>, Palantir does not currently have a working business model, or at the very least a working cost structure.</p><p>This is the root of the problem I would want management to address before even designing to give a price target on this business.</p><p><b>Valuation & Conclusion</b></p><p>So, do I like Palantir?</p><p>Absolutely, I do.</p><p>The company makes the sort of products and services that I would consider to be integral to effective working government and institutions. However, in terms of valuation, the company has fallen very quickly even from analyst mean targets.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7aa33b3dc2e0b863b7b522e16e7864f\" tg-width=\"640\" tg-height=\"435\" width=\"100%\" height=\"auto\"/><span>Palantir Mean Price targets (TIKR.com)</span></p><p>The current share price target goes down to below $6 at the lowest, and I consider even that to be too high for an unprofitable business. Despite the mean target being $12.35/share, less than half (3 out of 10) are currently at a "BUY".</p><p>It's pointless to talk about upside in terms of P/E without actual earnings. What we can look at is things like P/S or P/revenue multiples. At a P/S of just below 10X, it can be argued that the company is now below where it should be. At revenue multiples at around 8.5X, it's lower than ever before - but the quality of those revenues and those sales is very low because they actually don't net any positive bottom line.</p><p>Want Palantir?</p><p><b>Go options.</b></p><p>The only way I currently consider any valid is to make money, or potentially own the company at this time.</p><p>The $4 puts yield over 15% annualized at a currently offered $0.15 premium.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2afb61d62b3cc80c8043b76b8038ad39\" tg-width=\"492\" tg-height=\"376\" width=\"100%\" height=\"auto\"/><span>Palantir Put Options (Author's Data, Yahoo Finance)</span></p><p>Pretty good returns - as long as you understand that even under these circumstances, under the current profits and cost structure, even $4 is too much from a P/S and a P/Revenue perspective.</p><p>Still, it's a nice drop-down from $7.8 per share - over 50%. The company may go there. But if you want it, this is a way to actually make a<i>profit</i>- if it goes up, or even if it goes down a little. And if it does, you could end up owning PLTR at less than $4 after premiums.</p><p>Palantir is a relatively unique company.</p><p><i>I love the business.</i></p><p>I hate management/the way they<i>do business</i>because they're a failure in they haven't generated profit in almost 20 years.</p><p>For that reason, as they say on Shark Tank, "I'm out". I'm at a "HOLD", and I could sell some puts to make some money, but at the same time, even at $4/share, this company is too expensive.</p><p>Be careful if you're buying this business because it fails at the most fundamental things businesses are supposed to do.</p><p>It doesn't make any money.</p><p>Thank you for reading.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir: Just Overhyped And Unprofitable?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir: Just Overhyped And Unprofitable?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-25 17:40 GMT+8 <a href=https://seekingalpha.com/article/4514249-palantir-just-overhyped-and-unprofitable><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryI take a side-step from my typical valuation stock/DGR investing to heed a member and client request; to look at Palantir through my lens of investing.I've long been interested in Palantir ...</p>\n\n<a href=\"https://seekingalpha.com/article/4514249-palantir-just-overhyped-and-unprofitable\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4514249-palantir-just-overhyped-and-unprofitable","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2238553638","content_text":"SummaryI take a side-step from my typical valuation stock/DGR investing to heed a member and client request; to look at Palantir through my lens of investing.I've long been interested in Palantir because I understand the procurement/governmental side of the business due to my career.However, Palantir has problems. It's my view that the company is not investable, even at this valuation.Palantir is a great example of a great business idea being uninvestable due to a materially unattractive cost structure.Michael Vi/iStock Editorial via Getty ImagesI've long followed Palantir (NYSE:PLTR), in the way that one would follow something interesting from the periphery of one's vision. I've never engaged with or been close to considering investing In the business. Thereason is that it doesn't really fulfill any of my targets as far as investments go.However, just because I don't follow or consider a company good, doesn't mean it's not a good investment. Palantir has always been an interesting business because it works in a field where I myself have worked - only on the other side. Mission-critical digital infrastructure.It's an appealing field.There's zero doubt about it. Governments need it, and companies need to provide it. Most of the organizations I worked for before my career as an analyst still ran their systems on system backbones constructed in the mid-90s, which when used in 2017 was akin to strapping a rocket engine to a donkey.In this article, we'll do an A to Z.If you like Palantir, it's likely you won't like my conclusion.But I respectfully request that you, if you mean to leap in and defend Palantir, first take the time and look at the arguments.Ready? Let's get going.Palantir - From A to ZPalantir isnota freshly started tech growth stock. Palantir Technologies is an unprofitable tech company that was foundedafter the dot-com bubble in 2003.Many, many companies in the tech sector have gone from being startups to being profitable blockbusters in that time. Amazon (AMZN) is one of them. The first misconception is that Palantir is a \"new\" sort of company, but the fact is that it celebrates 20 years next year.The company has some heavyweight names behind it. The founder and Chairman of the business is Peter Thiel, co-founder of PayPal (PYPL), initially as a company touse PayPal's fraud recognition systems to reduce terrorism while preserving civil liberties.Now, that's a mouthful - and unclear.Today, Palantir does a few things, but we need to consider the company's operations on a high level - otherwise, they quickly become what's known as \"technobabble\" among those of us watching science-fiction.Palantir enables organizations to transform large amounts of information into forms/assets that make sense for their workflows/organizations.They do this through one of three principal software platforms:Gotham,enables users toidentify patterns,as well as helping to plan and execute real-world responses to threats that have been identified within the platform. In essence, the software identifies patterns that could be viewed as threats and allows government institutions to formulate effective responses.Foundrycreates a central operating system (OS) for data, allowing users to integrate and analyze data in one location. This allows organizations to test new ideas and track data in a way that's not possible in as simple a manner with legacy operating systems or software.Apollois essentially a software delivery system that can handle cloud delivery, on-premise or more advanced deliveries. Apollo delivers both software and updates, both the company's and customers' own updates.For someone not versed in governmental issues and challenges, even with this very short description, it might be hard to see what good this does the customers.Examples are a must. Here are 2.Palantir is used byAirbus (EADSY) and the aviation industry.It initially started off as an A350 Production software but grew into Skywise, the central OS for the entire airline industry. The company's software connects 9,000 planes from 100 operators, and Palantir's systems are used to assist in the design, manufacture, servicing, operations, and maintenance of global airline fleets.Utilities such asPacific Gas & Electric (PG&E)use the company's software in a central hub that could organize and analyze billions of data points every single day. Through Foundry, the company is presented with a complete picture of its operating grid, combining geospatial location, equipment health, and topology to answer questions regarding when to perform preventative maintenance and the like. Foundry has also been integrated in the process of switching off/on its system at critical junctures.This presents, in an effective manner, why the company's products and services are attractive to its consumers.Palantir Presentation (Palantir IR)This sort of business model is very reliant oneffective sales and marketing.These systems have extremely costly installation costs, high complexity, and very long sales cycles. Customer acquisition is complex and costly, even if these facts raise the entry barriers and moats in comparison to the competition.The fact that there's a very long history of failures in large-scale ERP system integration, and costly ones, are warning cases for customers and Palantir as well. This includes use cases such as Waste Management's (WM) $500M ERP failure, and military ERP integration failures of twice that amount. It's no surprise from these failures that institutions are extremely leery about implementing large-scale solutions and have become cautious to invest. So, one of the main challenges for Palantir is indeed overcoming this, and the track record that the company has with governments and megacorps spells out, in a very real way, that the company is succeeding in this.One confirmation of this was the way Palantir worked with the NSH to track the progress of COVID and contain the pandemic. Palantir also developed Tiberius, a software for vaccine allocation used in the United States and got a contract with the Food and Drug Administration in the US back in 2020.Some fresh stats.58%of the $1.5B in revenues generated in 2021 came from Government, the rest from the Commercial segment.57%came from US domestic customers, 43% from abroad.Average RPC (Revenue per Customer) on a TTM was $6.5M, which is down YoY, with the top twenty customers at an average of $43.6M, quite a bit above that, and up YoY. What this means is that big customers are becoming more important to the company.Fundamentally,Palantir does not have a credit rating. It also hasn't posted positive GAAP EPS at any point as of this time.Palantir GAAP EPS (TIKR.com)For the past quarter, with the latest 1Q22 highlights, the company focuses a great deal on the impressive numbers in its revenues. And indeed, in terms of sales revenues, commercial revenues (domestic especially), an increased customer count, and other sales positives.Palantir 1Q22 Presentation (Palantir IR)The company also posts a supposed \"adjusted OM\" of 26%. Given the number and type of adjustments, I consider these to be near-irrelevant in a profitability context. GAAP OM is negative 9% even with these absolutely superb revenue growth numbers. What this means is that despite record customer growth and record interest for the company's services, the company as of yet fails to turn a single dollar of GAAP profit.The company speaks of TAM expansion, with large addressable markets overall. The one positive takeaway that I see is that theoretically, given the OM improvement from revenues is that there is a theoretical point when the companycouldturn GAAP EPS positive if the customer growth is high enough.The company keeps adding customers and impressive contracts. The company's appeal and ability to add customers to its roster across the globe is not the question.The profitability with which the company does this is in question.Everywhere Palantir reports, the company speaks of revenues, customer counts, contracts, deals closed, billings, and \"adjusted\" margins. The company's guidance numbersstrictlyfocus on adding revenues, and adjusted sort of margins.The company knows well its challenge of becoming a GAAP-profitable business.How bad is it?I view it as \"pretty bad\". Numbers and visual representations of numbers speak louder than words.Palantir - Profitability/Shares Outstanding (TIKR.com)Palantir has failed to produce positive EBITDA, and positive Operating income, and has recorded massive increases in share count due to substantial SBC over the past few years. The impact of SBC can best be understood by taking look at the gross profit numbers, including SBC.Overall, Palantir has recorded over $2B of SBC in FY20 and FY21, which can be compared to FY20 and FY21 sales revenues of around $2.6B - a fairly exorbitant amount by any standard.I went through the results of excessive SBC in my article on Twilio (TWLO). SBC isn't a problem - but it cannot be ignored as a cost, as some are wont to do. It needs to be added back, and this means that SBC is a drag on company profits - as any expense is supposed to be.Palantir Presentation (Palantir IR)One of the main problems with Palantir's SBC is that management, as of yet, hasn't issued any sort of guidance as to these expenses or their plan for them, which obviously leaves investors in a bit of limbo. This is especially problematic given that Palantir has lost more than 58% of its value since December of 2021, and now trades below $8/share.Imagine if part of your comp was SBC, and you've lost around 50% of that value in less than 5 months. Pretty brutal, regardless of whom you are. Also, a large part of that SBC is being granted to management.Plenty of contributors viewed the SBC as a non-issue in 2021, arguing that the company is about to deliver on multimillion projects which could leave them in a labor lurch if engineers were to leave, which can be prevented with appealing SBC packages. I personally don't believe, given share price performance and how the SBC is split among the employees, that this acts as a big motivator anymore. You could make an argument that Palantir should be attractive as an insider buying target here.Evidence suggests otherwise.Executives and insiders are selling their stocks as soon as they can, and there haven't been registered insider buys for a very long time.Palantir insider trades (MarketBeat)So, Insiders are telling you that \"I don't like this price\". Not at $20/share. Not at $10/share. Not even at $9/share. If the people going to work every day aren't willing to hold onto their shares, why should you want to buy the company at this price?So, concluding this, I argue that while the company is skilled at presenting us with revenue increases, new clients, new contracts, and interesting case studies,the math still doesn't work.The numbers are awful.Operational Challenges...A core issue that Palantir is facing is the growth on the commercial side of the business, versus the much-lauded governmental business side of the business. It's this which for a long time has been called the differentiator between PLTR and other companies. Governmental growth has been the argument for investing in the business, in that the growth here is going to be/could be in the triple digits, but the trend has actually gone the other way, down to only 16% government-specific revenue growth for the latest quarter. That same number was 76% a year ago.As I mentioned above, governmental contracts account for the majority of the company's revenue. A slowdown here is serious business, and it's being underestimated by bullish contributors on the company, not even starting to mention some of the math that doesn't work.Yeah, commercial revenues are on the rise, but part of the bull thesis has always been that governmental, long-cycle, massive-contract-value appeal. If the company is now starting to focus on smaller contract value, commercial-type contracts, that could prove dilutive to the company's margins. SG&A is already at significant levels, and as I mentioned - these companies need excellent salespeople.I watch a lot of Shark Tank, as I'm sure some of you do as well. And I can't help but think that when I watch this company and dig through its numbers, I feel a bit like Marc Cuban or Kevin O'Leary telling someone thatyour business model doesn't work.If you continually adjust your profitability metrics by excluding or adding certain items but are never profitable on any metric that actually matters, you don't have a profitable business. You have a business - but not a profitable one.Palantir keeps losing money.The net loss for 1Q22 alone was over $100M. If we follow these losses in the accumulated deficit item in the balance sheet, we learn that Palantir has accumulated $5.6B as of 1Q22. That's around 33% of its entire market capitalization.The problem is, as I say - operating expenses. Operating expenses are a collection of expenses including things like Sales, Marketing, payroll, admin, overhead, and so forth.And Palantir is failing to get these right.Business 101: if your operating expenses are higher than your revenues, that means you arelosing money on a per-sale basis.If this becomes a trend, all you're doing on a per-sale basis is adding new losses to that accumulated deficit. If shareholders, financiers, or the market keeps propping you up, well, you can go right ahead and keep financing and working your business, continually operating at a loss.On a per-dollar level in sales, the company is spending 39 cents for every dollar made in sales, in Sales/marketing.That's insane. It's at a level where Mr. O'Leary if someone came to him with the idea, would say that the time has come for you to take your business idea behind the barn and shoot it. Palantir has been completely unable to bring these down. They've remained over 35% foryears.And management has yet to give any concrete plan for bringing this down.Remember, even if they started bringing it down, they'd have tobreak evenbefore we can start talking about GAAP Profit. As of right now, I don't even see a way for the company to actually break even on a GAAP basis....and doubts about Scalability...When you operate a highly specialized business, your expertise and tailoring your product specifically to consumers is incredibly important and difficult. It takes time. You're not selling a $1.49 widget at a store; you're convincing a customer to adopt a highly specialized solution.High CAC (Customer Acquisition Costs) or sales/marketing costs compared to income or sales revenue are typically indicative of advanced products that require a great degree of marketing and tailoring. This is not an issue in itself - it becomes an issue when the argument is for this to be scalable. Because if you're losing money on every sale now, there really isn't an argument to be made for the scalability of its sales models that could produce a positive profit.But Wolf Report,you might say -surely you can't just use a method that would be used on a $50k startup when viewing Palantir? They're wildly different businesses, and Palantir has a market capitalization of over $15B!They do. They have a massive market cap, and they've done very impressive things.They've done very impressive things, except the one thing that I care about -they haven't generated positive GAAP EPS....leading to question the company's fundamental existenceWhat I love about investing is that it's a binary sort of thing. It's a Yes/No- thing.You either have profit, or you haven't. I don't allow for senseless and whitewash adjustments. Palantir hasn't made a profit, and I don't see any indication that it's going to turn a profit this year either.Palantir suffers from what typically is the Achilles heel in a startup - not a $15B tech giant -Optimism.The company and the bullish contributors are so in love with the company's ideas, products, and services. They're so very convinced, that this is needed. This is something the world, that companies, and governments, desperately need.And you know what?Palantir is absolutely right. The bulls are absolutely right. The world, the governments, and organizations need such products.You will not find me arguing with this. As I mentioned, I worked on this equation, in procurement. I would have been thrilled beyond the moon to be able to take advantage of their excellent offerings.Why?Because Palantir has no real peers. I've looked. No company does what Palantir does, not to the degree. Oh, there are businesses like Tyler Technologies (TYL), Verint (VRNT), and Splunk (SPLK) - but none offer the sort of comprehensive solution that is Gotham, Foundry, and Apollo.The problem is- and I want to drill this home with the sort of fervor of slamming a gavel into the tabletop again and again -you are not doing so profitably.What right does a company have to exist, that is unable to generate acceptable GAAP profits in near-on 20 years?How long should patient shareholders wait before carefully knocking on Palantir's door and asking;\"Y'know, I lent you some money a few years back, any idea when I can start seeing some return on that?\"A company that does not generate profits is not a company with a future. It's either a charity or a company that does not deserve to survive.The solutionBecome profitable.Quite an obvious solution there, but it's really the only thing that can be said. Palantir is focusing on acquiring new customers and adding new contracts - when every sale they make adds more losses, not profits, to their balance sheets.What the company needs to do is one of two things - or preferably a combination of both.Cut ExpensesRaise pricesAnd speaking of someone from the government, I can tell you that one of the least interesting points when we were procuring specialized solutions, was actually pricing. Fit, ease of use, and scalability were far more important. I'm not claiming to have enough insight into the business that I know what the company \"should\" charge, beyond saying that Palantir needs to charge more for their products and services. This is in part because I believe it will be hard to cut SG&A from the company's process due to the highly specialized nature of sales.Palantir Presentation (Palantir IR)Palantir isn't profitable. Palantir needs to become profitable. There are only two ways to do that. Either spend less or earn more.But earning more while maintaining a cost structure that results in losses, not profits, is not a way to go about it.The obvious result of such a strategy, in the end, is that Palantir will keep dropping. Remember, as interest rates rise, debt will become increasingly more expensive. The company will have to raise capital, and issue equity at more and more expensive levels.In the end, it will all come to its natural conclusion.The company will either become defunct, or it will be chopped up and sold for parts. I personally believe that the company's products are solid and would probably make for excellent assets in someone's business - though I do not argue for investing in Palantir as an M&A target.Bulls focus on revenues, sales, and contracts.This is the wrong focus.Before you can start to focus on growing the business, or the product, you must ask yourself -do you have a working business model?A working business model entailsmaking money.Palantir does not.Ipso Facto, Palantir does not currently have a working business model, or at the very least a working cost structure.This is the root of the problem I would want management to address before even designing to give a price target on this business.Valuation & ConclusionSo, do I like Palantir?Absolutely, I do.The company makes the sort of products and services that I would consider to be integral to effective working government and institutions. However, in terms of valuation, the company has fallen very quickly even from analyst mean targets.Palantir Mean Price targets (TIKR.com)The current share price target goes down to below $6 at the lowest, and I consider even that to be too high for an unprofitable business. Despite the mean target being $12.35/share, less than half (3 out of 10) are currently at a \"BUY\".It's pointless to talk about upside in terms of P/E without actual earnings. What we can look at is things like P/S or P/revenue multiples. At a P/S of just below 10X, it can be argued that the company is now below where it should be. At revenue multiples at around 8.5X, it's lower than ever before - but the quality of those revenues and those sales is very low because they actually don't net any positive bottom line.Want Palantir?Go options.The only way I currently consider any valid is to make money, or potentially own the company at this time.The $4 puts yield over 15% annualized at a currently offered $0.15 premium.Palantir Put Options (Author's Data, Yahoo Finance)Pretty good returns - as long as you understand that even under these circumstances, under the current profits and cost structure, even $4 is too much from a P/S and a P/Revenue perspective.Still, it's a nice drop-down from $7.8 per share - over 50%. The company may go there. But if you want it, this is a way to actually make aprofit- if it goes up, or even if it goes down a little. And if it does, you could end up owning PLTR at less than $4 after premiums.Palantir is a relatively unique company.I love the business.I hate management/the way theydo businessbecause they're a failure in they haven't generated profit in almost 20 years.For that reason, as they say on Shark Tank, \"I'm out\". I'm at a \"HOLD\", and I could sell some puts to make some money, but at the same time, even at $4/share, this company is too expensive.Be careful if you're buying this business because it fails at the most fundamental things businesses are supposed to do.It doesn't make any money.Thank you for reading.","news_type":1},"isVote":1,"tweetType":1,"viewCount":323,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9026568386,"gmtCreate":1653402059045,"gmtModify":1676535275302,"author":{"id":"4097322786112660","authorId":"4097322786112660","name":"Cindywcy","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4097322786112660","authorIdStr":"4097322786112660"},"themes":[],"htmlText":"buy the dip","listText":"buy the dip","text":"buy the dip","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9026568386","repostId":"2237835951","repostType":2,"isVote":1,"tweetType":1,"viewCount":632,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9026568386,"gmtCreate":1653402059045,"gmtModify":1676535275302,"author":{"id":"4097322786112660","authorId":"4097322786112660","name":"Cindywcy","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4097322786112660","authorIdStr":"4097322786112660"},"themes":[],"htmlText":"buy the dip","listText":"buy the dip","text":"buy the dip","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9026568386","repostId":"2237835951","repostType":2,"isVote":1,"tweetType":1,"viewCount":632,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9022327688,"gmtCreate":1653481325544,"gmtModify":1676535289441,"author":{"id":"4097322786112660","authorId":"4097322786112660","name":"Cindywcy","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4097322786112660","authorIdStr":"4097322786112660"},"themes":[],"htmlText":"boring","listText":"boring","text":"boring","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9022327688","repostId":"1171432369","repostType":2,"isVote":1,"tweetType":1,"viewCount":380,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9022322003,"gmtCreate":1653480994502,"gmtModify":1676535289356,"author":{"id":"4097322786112660","authorId":"4097322786112660","name":"Cindywcy","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4097322786112660","authorIdStr":"4097322786112660"},"themes":[],"htmlText":"wait for price to drop lower than buy","listText":"wait for price to drop lower than buy","text":"wait for price to drop lower than buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9022322003","repostId":"2238553638","repostType":4,"isVote":1,"tweetType":1,"viewCount":323,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}