Mr. Misunderstood
Long-Term Investor, Misunderstood Businesses & Asymmetric Upside
Palantir would have to fall a lot to be worth buying, because its valuation assumes years of near-flawless execution. That future is too distant to predict with confidence: a new competitor could emerge, the industry could change structurally, or unforeseen events could reshape the landscape. Investing in a company's future still requires that future to be somewhat predictable. x.com x.com
Palantir's reliance on pay-as-you-go service with refunds makes customer cancellations and sudden earnings declines or write-downs a serious risk as AI and high SaaS prices pressure the business. Its 10-Q warns of these risks. Anthropic can and will easily replace Palantir with an all-in-one platform under Democratic control of the legislative branches. x.com x.com
Palantir is overvalued, trading around 100 times forward earnings, 161 times trailing earnings and 73 times sales. x.com
Continued improvement in fundamentals and technicals could carry Palantir to megacap scale. A $1 trillion market cap is a realistic destination for strong growth companies, and Palantir appears on that path, though its timing is uncertain. Drawdowns remain opportunities to accumulate until the thesis changes. x.com
Palantir is still expensive even after falling about 45% from its highs, so it is a great business but not yet a great stock to add. At its $207 peak it priced in perfection, at roughly 70x 2026 sales and 230x trailing earnings; near $113 it trades at about 38x sales and 127x earnings as the business keeps executing. Interest returns near $100, with more aggressive buying in the $80-90 range or if the stock moves sideways long enough for revenue and earnings to grow into the multiple. x.com
Palantir's valuation is extreme relative to established defense companies. At $137 a share and a fully diluted market cap above $350 billion, the same money could buy Northrop Grumman, General Dynamics and Lockheed Martin with enough left for L3Harris. x.com
Palantir makes an amazing product no one else can match, and once customers are in the system it becomes incredibly difficult to leave. That has driven immense growth in customers, earnings and backlog, making it one of five growth stocks set to dominate over the next decade. x.com
Palantir's valuation leaves it vulnerable to a nasty reversal. Its attached metrics show 178.8x trailing earnings, 80.1x trailing sales on an enterprise-value basis, and 110x next-twelve-month earnings. x.com
Palantir's roughly $500B market cap and 80x sales make it prudent to trim exposure despite continued affection for the company. Its tenfold run has already delivered substantial gains, not just the beginning; smaller speculative positions are getting crushed in this environment. x.com x.com
Palantir may be undervalued because the market values it as a software company while its opportunity is much bigger. It spans AI deployment, government contracts, enterprise adoption and mission-critical data infrastructure, and expensive stocks can stay expensive when the business keeps expanding. x.com
Palantir is a bit pricey at 85 times next-twelve-month sales, even after a quarter that Jim Cramer said he liked. x.com
