Palantir (PLTR) is a data analytics and software company founded in 2003 by a team that included Peter Thiel and Alex Karp. Palantir initially built its reputation through national security and counter-terrorism contracts with U.S. government agencies. The company builds platforms to help organizations integrate, manage, and analyze large volumes of complex data. Here’s an in-depth look at what Palantir is, why it’s growing rapidly, who its main competitors are, and what competitive advantages it may have: What is Palantir? Palantir develops advanced data integration and analytics platforms. Its flagship products include Gotham, which was initially developed for government and intelligence agencies. Gotham is designed to help users uncover patterns and actionable insights from vast amounts of disparate data. It has been widely used by defense and law enforcement agencies. Foundry is geared more toward commercial enterprises; Foundry transforms the way organizations operate by integrating data from multiple sources into a centralized platform that supports decision-making across various industries. As organizations and governments generate ever-larger volumes of data, the need for sophisticated tools to analyze and extract actionable insights has skyrocketed. Palantir’s platforms address this need by effectively handling complex, heterogeneous data sources. The company’s early and continued work with high-profile government agencies has provided a steady revenue stream and enhanced its credibility. The company is known for tailoring its solutions to its clients’ specific operational needs. This deep customization means that once implemented, Palantir’s software becomes deeply embedded in an organization’s workflow, resulting in high switching costs. Given its origins in the national security domain, Palantir strongly emphasizes data security and compliance. Its platforms are built to handle highly sensitive information, making them particularly attractive to government agencies and heavily regulated industries. Consequently, the company has experienced consistently impressive growth. Revenues have grown more than 285% in the past five years as of the most recently reported FYE, December 2024, which the company reported last week. The only knock on the company is valuation. Valuation concerns Physicists who studied the universe’s expansion initially believed that gravity would slow it over time. Similarly, multiples will often contract for fast-growing companies as operating results grow faster than the stock price, companies “grow into” their valuation, industries mature, and new competitors emerge. Based on more recent observations, physicists now believe that the universe’s expansion is accelerating and hypothesize the existence of “dark matter” to explain the gravitational effects implied by observations that cannot be explained by general relativity with observable matter. Palantir’s stock price this past week seems analogous. This is because significant growth was anticipated and priced into the stock before it occurred. A positive earnings surprise caused the stock to pop, not just to catch up with higher forward estimates but on considerable forward p/e expansion as well. Palantir is now up nearly 50% year-to-date and trades at an eye-watering 207 times forward earnings estimates and 68 times full-year estimated revenues. PLTR YTD mountain Palantir, YTD Palantir has deep ties to the new administration. Palantir co-founder Peter Thiel, who also co-founded PayPal with the administration’s DOGE Chief Elon Musk, strongly backed the Trump/Vance ticket, but this isn’t new information to investors. One possibility in cases like this is a short squeeze, where individuals who were short on stock presented with better-than-anticipated operating results cover their positions, driving the stock higher. But the short interest is about 4% of the float, not far from a day’s average trading volume. While some shorts may well cover on the sharp rally, what remains isn’t likely to be sufficient to promote a meme stock-like rally from here. One aspect that is almost meme-like, though, is the volatility. The options market implies the stock could move about 20% higher or lower within the next 6 weeks. The trade One way to bet that a stock will remain within a range — mainly a very wide range such as the one implied here — is to sell a strangle: sell an upside call and a downside put. The tricky part is that such a trade’s risk and capital requirements can be substantial in highly volatile stocks, particularly those whose movements are hard to explain. An iron condor hedges by combining a short strangle with a further out-of-the-money long strangle. This reduces the return, but it also reduces the risk and capital required to initiate the trade. I’ve provided an example of an iron condor expiring on March 28th here: Buy PLTR March 28 $80 put Sell PLTR March 28 $95 put Sell PLTR March 28 $140 call Buy PLTR March 28 $155 call DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
