It has been a while since I have last posted about Palantir, and since then the stock has remained relatively flat. However, a lot has changed in their business since then (July 1st 2021) and I thought that it would be beneficial for me to provide you with an update on current events and their impacts on the $PLTR stock.
This “refresher” will provide you with insight into Palantir’s recent SEC filings, news releases, and insider selling information.
My previous posts are linked here and here
Recent SEC Filings:
- Since my previous post, Palantir has filed 31 Form 4’s:
- These forms regard the sale/purchase record of Palantir’s stock.
- The amount of insider selling was worrying in my first analysis; however, this concern still remains. More information on the sale of stock from insiders will be discussed in the “Insider Selling” section below.
- Q2 2021 Quarterly Report:
- 49% revenue growth YoY
- US Commercial (B2B) revenues up 90% YoY (32% QoQ)
- Closed 62 deals (30 of which are $5M+, and 21 are $10M+), and experienced a 13% QoQ customer growth.
- Reported their first positive Adjusted EPS of $0.04
- Maintained their 30% annual growth target over the next 4 years.
- Increased their free cash flow guidance by 100%.
Overall, Palantir has performed very well financially since I last analyzed their stock. However, the problems regarding their insider selling are still looming around and restricting Palantir from making a large move.
$90M Data Integration Contract:
- On October 7th, 2021, Palantir announced their continuation of their data integration contract with the VA (Department of Veterans Affairs). This will allow the VA to integrate their health and benefits systems into a common operating platform.
- The value of this deal is $90M over the course of 4 years ($22.5M/year). Palantir has worked with the VA in the past, however this is Palantir’s first full contract with the VA.
- Palantir will provide deep insights on the quality of the care that veterans are receiving, without taking control of the data provided by the VA.
- On October 4th, 2021, Palantir announced that they came to an agreement with the NIH on the terms of continuing their data software to the NCATS (National Center for Advancing Translational Sciences) for COVID-19 research.
- This terms of this contract include an initial task order of $7.9M over the next 5 months, and total potential value of $59.5M over the next 2 years.
- Palantir’s work with the NCATS is critical to the fight against COVID-19 and its associated health challenges.
ICE Contract Worries:
- On September 30th, 2021, rumours began circulating that Palantir may be losing their contract with ICE (Immigration and Customs Enforcement). Palantir has been providing FALCON (essentially Gotham customized for ICE’s needs) surveillance to ICE since 2013 and has accumulated over $111M in revenues since 2013.
- The reason for these rumours is that the ICE is developing RAVEn, which is sent to go live in November. RAVEn has been developed to essentially be a replacement for FALCON.
UK Government Contract:
- On September 10th, 2021, The UK Government ended their data deal with Palantir. This came after the NHS received criticism by privacy groups about the “lack of transparency on their contracts with Palantir”.
- There is not a lot of public information about the contract between Palantir and the UK Government.
$25M Investment into Faraday Future:
- On August 26th, 2021, news broke that Palantir invested $25M into Faraday Future’s SPAC merger. Since Palantir’s $25M investment Faraday Future’s stock ($FFIE) is down 10%, which represents a loss on their investment of $2.5M since August 26th, 2021.
- In addition to their investment, Palantir was also able to sign Faraday to a commercial contract that involves the use of Palantir’s software. The duration of this contract has been estimated to be 4-6 years.
- Faraday’s electric vehicles are expected to harvest a large amount of data through their sensors and cameras.
$50M Inflation Hedge:
- On August 17th, 2021, Palantir has placed a $50M investment into gold bars. Palantir purchase stemmed from their uncertainty in the US and World economies.
- Since this purchase the stock market (S&P 500) is down 1.4%, and the price of gold is down 1.5%.
$823M Army Contract:
- On October 5th, 2021, Palantir announced that they were selected for the US Army Intelligence contract.
- This contract was said to be worth $823M, and provides the Army with their Gotham platform, and will provide a globally federated intelligence data analytics platform for multiple security classifications.
- The contract is classified as a CD-2 (Capability Drop) and is meant to modernize the US Army.
With the exception of this ICE contract worries, and the loss of a contract with the UK Government, Palantir has had very good news coverage/publicity. This is very good to see as it was noted in my last analysis that Palantir’s bad publicity could pose a risk to their stock. So far, they have been able to get off to a good start in their efforts to rehabilitate their image, however they need to keep up this momentum to have a chance at “wiping the slate clean”. If they are able to do this, we may start to see more retail investors and institutional investors alike getting on board, and purchasing $PLTR stock.
Since my last analysis on Palantir (July 1st, 2021), the fear/risk of insider selling has still remained very prevalent within Palantir. The following is a list of Palantir insiders and how many shares they have sold in the past 3 (or so) months.
*A Insider Selling visual is attached to the bottom of this analysis*
Alexander Karp (CEO):
- Sold 2,554,516 shares in July for an average cost basis of $23/share (totalling $58.75M worth of shares) and repurchased 0 shares.
- Sold 1,277,258 shares in August for an average cost basis of $22.16/share (totalling $28.3M worth of shares) and repurchased 0 shares.
- Sold 2,554,516 shares in September for an average cost basis of $25.66/share (totalling $65.55M worth of shares) and repurchased 0 shares.
Shyam Sankar (COO):
- Sold 172,540 shares in July for an average cost basis of $21.31/share (totalling $3.68M worth of shares) and repurchased 0 shares.
- Sold 114,435 shares in August for an average cost basis of $24.65/share (totalling $2.82M worth of shares) and repurchased 0 shares.
Alexander D. Moore (Director of Operations):
- Sold 11,000 shares in August for an average cost basis of $22.06/share (totalling $242,600 worth of shares) and repurchased 0 shares.
- Sold 34,000 shares in September for an average cost basis of $24.11/share (totalling $819,740 worth of shares) and repurchased 0 shares.
David A. Glazer (CFO):
- Sold 54,000 shares in August for an average cost basis of $24.72/share (totalling $1.33M worth of shares) and repurchased 0 shares.
- Sold 27,000 shares in September for an average cost basis of $27.30/share (totalling $737,100 worth of shares) and repurchased 0 shares.
Peter Theil (Co-Founder):
- Sold 3,262 shares in August for an average cost basis of $25/share (totalling $81,550 worth of shares) and repurchased 0 shares.
Stephen Andrew Cohen (Co-Founder):
- Sold 15,000 shares in August for an average cost basis of $24.07/share (totalling $361,050 worth of shares) and repurchased 0 shares.
- Sold 114,000 shares in September for an average cost basis of $27.43/share (totalling $3.13M worth of shares) and repurchased 0 shares.
- Sold 60,000 shares in October for an average cost basis of $23.32/share (totalling $1.4M worth of shares) and repurchased 0 shares.
Ryan D. Taylor (Chief Legal and Business Affairs Officer):
- Sold 162,400 shares in August for an average cost basis of $24.31/share (totalling $3.95M worth of shares) and repurchased 0 shares
Spencer M. Rascoff (Board Member):
- Sold 100,000 shares in August for an average cost basis of $26.19/share (totalling $2.6M worth of shares) and repurchased 0 shares.
As you can see, there is still a large deal of insider selling at Palantir. This is very worrying to many potential and current investors in Palantir, as it continues to ravage their share price. Once Palantir gets control of their insider selling, and has stable levels of selling, then we may see them start to gain momentum. However, if these insiders keep selling each time he stock gets pumped, they will never be able to sustain a long run.
What do retail investors have to say about the level of insider selling?
On Twitter there are many people who have pointed out the fact that Palantir is killing their share price (and do not have faith in their own company) based off of the large amount of insider selling that is going on. A lot of users have been quick to point out the fact that there is large insider selling and the level of insider selling has not slowed down recently, which is the opposite of what most $PLTR investors wanted to see happen.
Furthermore, many Reddit users have clued in on the fact that Palantir has huge levels of insider selling, and they have expressed their worries about it. However, some users were quick to point out that Alexander Karp (CEO) was only selling the amount of shares necessary to exercise his options and pay the tax burden associated with it. Conversely, people have argued that the inside selling has increased the number of shares outstanding by 8% this year alone, which dilutes the value of existing shares. Overall, Reddit has a more mixed reaction to the insider selling but still have expressed their concerns.
I believe that my valuation as conducted in my first series of Palantir analyses (found here) is still valid at/around the $29/share mark. This may be a bit low considering their large growth rates achieved in their last couple of SEC filings. However, if the stock reaches my $29/share target it will result in an upside to this investment of over 23%.
Overall, I think that Palantir is a good stock, that exhibits the potential to be a great stock over the next decade. With that being said, they face a fair share of problems and “speed bumps” in front of them. But if they are able to fix these problems and navigate the bumpy road ahead there will be a great reward for both the investors and the employees of Palantir.