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Is Palantir Stock a Buy?
April 8, 2021
Unbeknownst to a lot of people, some of the world’s biggest leaps in innovation – including the advent of the Internet – were created by governments and its various agencies.
It’s in this vein that one of the hottest software stocks recently, Palantir Technologies Inc (NYSE: PLTR), got its own start. The company helps clients make sense of enormous datasets through the use of two key platforms.
However, Palantir actually began life back in 2003 with funding from the Central Intelligence Agency (CIA).
Although many of its customers were government entities – helping them with big data analytics – Palantir has now also branched out to commercial customers.
With the charismatic entrepreneur Peter Thiel as one of its founders and having gone public via a direct listing at US$10 a share in September last year, is Palantir a buy for long-term investors?
Palantir’s push outside of the government sphere, and into the commercial space, clearly illustrates that the company’s technology is applicable to both realms.
In fact, management of Palantir currently predict that its total addressable market (TAM) is a whopping US$119 billion, with US$63 billion in the government sector and US$56 billion in the commercial space.
With 2020 full-year revenue of only US$1.1 billion – which was up 47% year-on-year – the runway for Palantir to keep growing into the space is huge.
In the fourth quarter of 2020, the company signed multiple large deals with companies in the automotive, energy, healthcare, insurance and mining sectors.
This is clearly paying off and showing up in the numbers. The numbers of customers generating over US$1 million, US$5 million and US$10 million in revenue are growing at an impressive clip (see below).
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be.
In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.