Is Palantir a Bargain in Big Data?
Many bargain hunters buy Palantir Technologies Inc. (NYSE: PLTR) because it could be a Big Data bargain.
For instance, Mr. Market paid $22.04 for Palantir (PLTR) shares and $2,046.47 for Alphabet (GOOG) on 26 March 2021. Similarly to Alphabet (GOOGL) Palantir builds software to help organizations integrate all their data into one platform.
Palantir is a Big Data Company
Thus, Palantir (NYSE: PLTR) is a big data company. However, many people dislike Palantir because of its connections to the US military and intelligence agencies.
Interestingly, Palantir is trying to adapt its intelligence software to private and civilian use. For instance, they designed Palantir’s Foundry program to connect intelligence to operations. Salespeople could use Foundry to correlate data about a business or clients to products.
Foundry automates intelligence functions so an organization can use and monetize all the data it collects. An automaker could use Foundry to give designers and engineers all the auto safety data it collects, for example.
Palantir deploys AI with Gotham
Another fascinating Palantir product is Gotham. Palantir claims Gotham is an AI-ready platform that improves and accelerates decision-making at every level of government.
They designed Gotham for the military, but I think you could apply to any complex organization. For example, a fire department, a corporation, a supply chain, or a city government. Notably, Palantir claims Gotham could give thousands of operators access data from millions of sensors.
Thus, Gotham could give every executive in at an oil company access to data from the company’s wells or pipelines. Moreover, I think Gotham could help organizes deploy artificial intelligence (AI). A retailer could use Gotham to deploy AI at all of its fulfillment centers, for example.
Or a trucking company could use Gotham to monitor dozens of self-driving semi trucks. Similarly, a utility could use Gotham to operate dozens of charging stations for electric vehicles.
Can Palantir Make Money?
So yes, Palantir (PLTR) has some products businesses could pay for. Value investors, however, will ask: “can Palantir make money?”
The financial numbers show Palantir made a little money its first few months as a publicly traded company. For instance, Palantir reported a quarterly gross profit of $322.09 million on 31 December 2020. That quarterly gross profit grew from $289.37 million on 30 September 2020.
Similarly, the quarterly income after tax grew from $289.37 million on 30 September 2020 to $322.09 million on 31 December 2020.
Palantir burns cash
The financial numbers show Palantir (NYSE: PLTR) burns cash and borrows money to survive.
Palantir reported a negative quarterly operating cash flow of -$296.61 million on 31 December 2020, for example. Palantir reported a quarterly financing cash flow of $1.036 billion on 31 December 2020. On the other hand, Palantir reported a net debt -$1.851 billion on the same day.
Conversely, Palantir reported a quarterly ending cash flow of $2.128 billion on 31 December 2020. Thus, Palantir’s business can generate some cash.
What Value Does Palantir have?
I think Palantir has little value because it reported quarterly revenues of $322.09 million on 31 December 2020. The quarterly revenues rose from $289.37 million on 30 September 2020.
Similarly, Palantir reported $2.049 billion in cash and short-term investments on 31 December 2020. The cash and short-term investments grew from $1.121. billion on 31 December 2019.
Overall, Palantir had $2.69 billion in total assets on 31 December 2020. The total assets grew from $1.594 billion on 31 December 2019.
Therefore, Palantir’s value is growing, but it is tiny. In comparison, Alphabet (GOOGL) reported $136.694 billion in cash and short-term investments and total assets of $319.616 billion on 31 December 2020.
Palantir is not a Big Data Company
Given those numbers, I do not consider Palantir a big data company. Instead, Alphabet (NASDAQ: GOOG) is the true big data company.
Instead of being a data company, Palantir (PLTR) is a startup that could grow into a big data business. Unfortunately, I think it could take decades for Palantir to grow into a big data corporation.
Consequently, I think the only value at Palantir is speculative. Palantir is an interesting company that has expertise and products that could help it make enormous amounts of money.
If you are looking for cheap speculative investment in the oil of the 21st Century; data. Palantir is a cheap and interesting stock. However, I do not think anybody will make money from Palantir for many years.