A Year of Unparalleled Success: Palantir Technologies Soars to New Heights
A Stellar Performance
Palantir Technologies (NASDAQ: PLTR) has just wrapped up a year that will be etched in the annals of history. The AI and data mining specialist witnessed a staggering 340% surge in 2024, making it the top-performing stock in the S&P 500 and the third-best performer in the Nasdaq-100.
The Driving Forces Behind Palantir’s Success
While the excitement surrounding AI’s potential certainly contributed to the stock’s remarkable run, a closer examination reveals that robust performance, innovative approaches, and strategic moves by management were equally responsible for the company’s success.
Financial Results: The Key to Success
Palantir’s financial results were the primary driver of its success last year. The company delivered four consecutive quarters of accelerating revenue growth, maintaining its profitability streak. The surging demand for Palantir’s Artificial Intelligence Platform (AIP) was the catalyst behind these impressive results. AIP enabled businesses to make data-driven decisions by tapping into company-specific information, making it an indispensable tool for organizations.
Innovative Approach: Boot Camp Sessions
In a stroke of genius, management developed boot camp sessions that paired customers with Palantir developers to demystify AI and create practical solutions within just five days. This innovative approach helped drive the company’s success, as evident from its recent results.
Third-Quarter Results: A Testament to Success
In the third quarter, revenue grew 30% year over year to $726 million, resulting in earnings per share (EPS) of $0.06, a 100% surge. The company’s U.S. commercial revenue, which includes AIP, grew 54% year over year and 13% sequentially, while the segment’s customer count soared 77%. This led to a 73% increase in the company’s remaining deal value (backlog), indicating that the growth spurt will continue.
Strategic Moves: Shifting to Nasdaq and S&P 500 Inclusion
Palantir’s consistently strong results set the stage for its blockbuster 2024. By the third quarter, the company had achieved its fourth consecutive quarter of profitability under GAAP, paving the way for its admission to the S&P 500 in September. In mid-November, management made a calculated move, shifting Palantir’s stock from the New York Stock Exchange to the Nasdaq, which led to its inclusion in the Nasdaq-100 index rebalancing in December. This strategic move opened the stock up to greater ownership among institutional investors.
Valuation: A Closer Look
While Palantir’s stock price has seen a significant increase, its valuation may seem frothy at first glance. However, applying the forward price/earnings-to-growth (PEG) ratio, which takes into account the company’s accelerating growth rate, returns a multiple of 0.37, indicating that the stock is undervalued. For investors with a long-term outlook and willing to withstand volatility, Palantir is worth considering.
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