Palantir Technologies: Intriguing SPAC Investments

Palantir technologies (PLTR) provides cybersecurity and related software and services to both governments and private companies. I am optimistic about PLTR stock.

Although PLTR has only recently caught the attention of investors, the company has been around for a while. Palantir, based in Denver, Colorado, was founded in the early 2000s by Peter Thiel and other business experts.

Palantir offers three platforms, including Palantir Gotham (which targets government agencies), Palantir Metropolis (mainly for financial institutions), and Palantir Foundry (used mostly by corporate clients).

As we will see, the company has a solid financial foundation. In addition, Palantir makes a number of interesting investments in companies that go public via SPACs, or special acquisition companies. (See Palantir stock charts on TipRanks)

A quick look at PLTR stocks

The fourth quarter of 2020 was really great for Palantir’s investors. The price of the PLTR stock has more than doubled, from $10 to $23 by the end of the year.

Early 2021 was also favorable as PLTR shares hit the $39 area in January and again in early February. However, that level proved to be a persistent point of resistance.

From March through August, PLTR shares traded sideways, eventually settling near $26. This was undoubtedly frustrating for the Palantir bulls.

Meanwhile, Palantir’s trailing 12-month earnings per share was -79 cents. That’s negative, but not terrible if the stock is in the $20 range.

If Palantir stays on track financially, the company should be able to provide a more favorable earnings profile.

Meet and beat the predictions

Judging by Palantir’s recent fiscal performance, it is reasonable to believe that the company is showing some improvement.

Palantir released the second quarter of 2021 tax date on August 12. The company reportedly met Wall Street’s expectation of earning 4 cents a share for the quarter.

Things only get better from there, as the analysts had forecast quarterly revenue of $360.3 million, but Palantir returned $375.6 million.

A notable highlight was Palantir’s quarterly government revenue. That figure rose 66% year over year to $232 million. In addition, this result surpassed Wall Street’s estimate of $219.3 million.

In addition, Wolfe Research analyst Alex Zukin pointed out what could be Palantir’s most impressive result for the quarter.

“Bookings were… strong, with the company unveiling a new financial measure (total contract value) of $925 million, up 175% year-over-year in the quarter,” noted Zukin.

Investing in innovative companies

For a tech-infused company like Palantir to stay ahead of the competition, it must keep pursuing fresh, new ideas.

One way to achieve this is by investing in innovative companies, which is exactly what Palantir does.

Palantir has mainly invested in companies that go public through SPACs. Therefore, these are not necessarily established companies and the investments will be somewhat speculative.

Still, Palantir’s move to award $250 million to 10 companies is bold and could bring significant benefits to stakeholders.

To give an example, Palantir is investing $20 million in Fast Radius, which offers a “cloud production platform.”

Palantir is also contributing $15 million to Tritium, a developer of chargers for electric vehicles, plus $10 million to Asian financial services firm FinAccel.

It will be interesting to eventually find out which of these companies gives Palantir the most returns.

Wall Street weighs in

According to TipRanks’ analyst consensus, PLTR is an average sell, based on buy 1, hold 2 and sell 3. The Analyst Palantir .’s average price target is $23.80 implying a 9.6% downside potential.

The takeaway

It is encouraging to see Palantir branching out into value-added SPAC investments.

These investments can give the company access to new, innovative technologies and increased revenues

As a result, Palantir should be able to improve its earnings profile, which will lead to higher prices in PLTR stocks sooner or later.

Disclosure: At the time of publication, David Moadel had no position in any of the securities mentioned in this article.

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