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Palantir shares will give ground before moving significantly higher
The data mining software company Palantir Technologies (NYSE: PLTR) started trading on the Big Board on September 30 after a direct public offering (DPO). In this direct listing, no new shares were offered in Palantir. Instead, existing shareholders were allowed to sell their shares to new investors. Source: Sundry Photography / Shutterstock.com The New York Stock Exchange initially set a reference price of $ 7.25 per share, but on the first trading day, the Palantir stock opened at $ 10 and closed at $ 9.50. On November 27, Palantir shares reached a record high of $ 33.50 and are now flirting with $ 25. InvestorPlace – Stock Market News, Advice and Trading Tips Palantir in Denver was founded in 2003 by a group of executives led by Peter Thiel, founder of PayPal (NASDAQ: PYPL). He was also one of the early supporters of Facebook (NASDAQ: FB). Palantir’s initial work, especially with government agencies such as the Central Intelligence Agency (CIA), is considered controversial and even mysterious. In the 10 of 2020’s most popular SPACs in preparation for the new year’s article, today we look at what investors can expect from the company. Although PLTR is relatively overvalued, investors with a long-term horizon may see any decline in the direction of $ 22.5 or even less as an opportunity to hold a long-term PLTR share. Here’s why. Government contracts and inventory Palantir Since 2003, Palantir has expanded its customer base to governments other than private corporations. For example, in November 2019, Palantir and Japanese insurer Sompo (OTCMKTS: SMPNY) jointly formed a joint venture. In June 2020, they launched the ‘Real Data Platform for Security, Health and Wellbeing’. Recent academic research by Roxana Akhmetova of Oxford University claims the ‘partnership is problematic’ because Thiel is a Trump adviser. In September, the US Food and Drug Administration (FDA) awarded Palantir a $ 44.4 million three-year contract. It provides data management and analysis services to the FDA’s Center for Drug Evaluation and Research (CDER), which focuses on potential new drugs. In early December, Palantir announced a collaboration with the Greek government. The country is working to improve its COVID-19 response efforts by integrating more data and analysis into the decision-making process. Recently, Palantir developed a tool for the US government to monitor the production of coronavirus vaccines, as well as their distribution. The British National Health Service is also working with Palantir. In the summer, reports CNBC, the British NHS Palantir gave access to millions of British residents’ private personal data. Palantir recently signed a two-year contract with the NHS. This will now provide the organization with a software platform for data processing. In a recent press release from the company, Palantir emphasizes that it supports a variety of institutions as they respond to the COVID-19 pandemic and adapt for the future. ‘How Palantir’s recent earnings appeared in mid-November, Palantir Q3 results announced. Revenue was $ 289.4 million, up 52% year-on-year. Net loss of $ 853.3 million, translated into diluted net loss per share of 94 cents. As of September 30, total cash and equivalents were $ 1.8 billion. Management increased annual turnover guidance for 2020 to $ 1.070 billion to $ 1.072 billion, with 44% more than a year-on-year increase. The company highlighted its international expansion in the quarterly statement. Co-founder and CEO Alexander C. Karp quoted: “Sompo’s work is crucial to the well-being and security of Japan, and Kengo Sakurada, the company’s CEO, has been a critical and trusted partner as we working with Sompo to reach us in Asia. The leading P / E, P / S and P / B ratios of Palantir shares are 208.33, 42.58 and 37.0, respectively. PLTR stock is frothy, even for growth stocks that could get a significant number of government contracts. Given the statistics, it is currently one of the most expensive software stocks in the street. For example, the following P / E and P / B ratios for the SPDR S&P Software & Services ETF (NYSEARCA: XSW) are 30.62 and 6.63. The Bottom Line Palantir is a growth stock and is likely to create shareholder value for many years to come. However, it is richly appreciated and expensive. Therefore, long-term investors may consider buying the declines, especially if the price drops to $ 22.50. Are you currently a shareholder? You might consider starting a covered call position in PLTR shares. Then you might be able to protect some of your paperwork. For example, an ATM cover that expires on January 15 will reduce the volatility of the portfolio and provide some downside protection. Investors can also consider this through an exchange traded fund (ETF) that also holds Palantir shares in its portfolio. Examples are the Renaissance IPO ETF (NYSEARCA: IPO), the First Trust US Equity Opportunities ETF (NYSEARCA: FPX), the Vanguard Mid-Cap ETF (NYSEARCA: VO), the ARK Next Generation Internet ETF (NYSEARCA: ARKW), or the BNY Mellon U.S. Small Cap ETF (NYSEARCA: BKSE). At the date of publication, Tezcan Gecgil (directly or indirectly) did not hold any positions in the securities mentioned in this article. Tezcan Gecgil has been working in investment management in the US and the UK for more than two decades. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) exam. Her passion is to trade options based on technical analysis of fundamentally strong companies. She especially likes to compile weekly covered calls for income generation and publish educational content on investing. More from InvestorPlace Why everyone invests in 5G EVERYTHING WRONG Top stock voters reveal their next 1,000% winner Radical new battery could dismantle oil markets The reported Palantir shares will give ground before moving significantly higher, appearing first on InvestorPlace.