Enterprise and government data analytics services provider Palantir Technologies' (NYSE:PLTR) stock has been selling off hard in the face of the stock market rally, leaving many investors to wonder when the bleeding will end.
Famed founder of the Ark Invest exchange-traded-funds (ETFs), Cathie Wood, has been adding millions of shares of Palantir to her ETFs to no avail as shares have continued to slide more than (-50%) off its all-time high of $45 reached in January 2021.
It’s hard to find much bearish sentiment across the spectrum from analysts tosocial media, yet, shares continue to sell off. The nearly two-decade-old company has yet to make a profit.
However, the 47% YoY top-line growth illustrates the potential for margin improvement and profitability as it evolves its “holy grail” big data analytics platforms.
One of the biggest setbacks for shareholders is the massive dilution stemming from its stock-based compensation programs. This could be the source of the seemingly endless supply of selling despite benchmark indexes at or near all-time highs.
The Company anticipates full-year 2021 revenue growth to exceed 30% year-over-year (YoY), but shares continue to sell into each positive press release. The Company CEO has stated that its stock is suited for investors with a long-term horizon.
Risk tolerant investors can monitor for opportunistic pullback levels to consider patiently scaling exposure in this cutting-edge big data analytics play.
Q4 Fiscal 2020 Earnings Release
On Feb. 16, 2021, Palantir reported its fiscal Q4 2020 results for the quarter ending January 2020. The Company reported earnings-per-share (EPS) loss of (-$0.08) versus consensus analyst estimates for a profit of $0.02, a (-$0.10) miss. Revenues grew 40% YoY to $322 million, beating analyst estimates for $301 million.
The Company also expects Q1 2021 revenues to grow over 45% YoY to $348.87 million versus consensus analyst estimates at $309.47 million. The Company still expects full-year 2021 revenues to come in around $1.42 billion and matching analyst estimates for 30% YoY growth.
Conference Call Takeaways
Palantir Co-Founder and CEO, Alex Karp, commenced with a long-winded narrative:
“There’s one trend; institutions, countries, individuals that can assess the value of software that can work now are the institutions that survive and provide value both in the government, commercial and even moral context, moral as defined by they increase the legitimacy of institutions.
"The numbers that you’ve seen are a reflection of our bet that this would happen, they are a lagging indicator. And we believe that the transformation, which is happening in the world now, will accelerate.
"And that the way in which we’re providing software, both a Foundry/Gotham, and our ability to scale this through Apollo will be the way that everyone at some point will actually try to build software.”
CEO Karp went on a convoluted philosophical rant asking (and partially answering) his questions in a roundabout manner.
Pandemic Opportunities
Palantir COO, Shyam Sankar, provided a more solidly material narrative:
“2020 was a seminal year for Palantir. We helped 100 commercial organizations and 10 national governments respond to the COVID crisis. We were able to solve incredibly complex problems in three days and enabled our customers to reinvent themselves amidst these continuum shocks. But of course, that’s not just three days. It’s 15 years of product development, more than $2 billion on R&D and three days.
"And for many of those customers, in a short period, we became their default operating system. We became critical to the core functioning of their operations. In meeting that moment our business grew significantly in 2020 resulting in 47% revenue growth on a full year. And we created substantial opportunities for growth over the next year and beyond.”
COO Sankar went on to provide a number of real-use cases of major companies, like Rio Tinto (NYSE:RIO)’s 90 plus systems, which include sensors, instruments, and machines integrating all the data to provide a single source of truth on its Foundry platform.
California’s PG&E collects over 10 billion data points daily. Foundry enables integration of that data to, “allow them to improve their electric operations and asset management resulting in enhanced safety and grid reliability.”
The use cases are very compelling and illustrate the potential for making data-driven decisions using billions of pieces of data in real-time. The Company continues to grow its total addressable markets (TAM) in the commercial space with the momentum generated from the pandemic and amongst industry peers.
The question of share dilution will ultimately be answered by the markets as shares reach opportunistic pullback levels.
PLTR Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for PLTR stock. The weekly rifle chart has a bearish inverse pup breakdown with a falling 5-period moving average (MA) at $22.54 with lower Bollinger Bands® (BBs) at the $15.31 Fibonacci (fib) level.
The daily rifle chart formed a breakdown as shares collapsed through the $22.64 market structure low (MSL) trigger. Shares initially gained selling momentum on the breakdown below the market structure High (MSH) sell trigger at $25.23.
While the charts are bearish, they are also oversold.
Prudent investors can monitor for opportunistic pullback levels at the $17.82 fib, $17.06 fib, $16.12 fib, $15.31 fib, $13.94 fib, and the $12.98 fib.
Upside trajectories range from the $23.79 fib up to the $30.86 fib level.