Company actions since direct listing do not imply major accelerations in dilution or SBC. Dude, youre ranting, give us the bottom line: No problem! Palantir insiders are known to have unloaded stock immediately after their lockup period expired. and our something shareholders cheer as SBC dilutes the value of existing shares. Reddit, Inc. 2023. Justin Pope has no position in any of the stocks mentioned. With a market cap of $36 billion, Palantir is still valued at 24 times this year's sales. Total contract value: $925 million, up 175%. Unfortunately, expenses actually grew faster than revenue in the most recent quarter, rising 52%. I am the founder ofYiazou Capital Research, a stock-market research platformdesigned to elevate, due diligence process through in-depth analysis of businesses.. I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. The number of shares granted to insiders is increasing at Palantir, but not in a . The company currently has 250 million warrants that won't technically exist until employees hit these milestones. I am the founder of Yiazou Capital Research, a stock-marketresearch platform designed to elevate your due diligence process through in-depth analysis of businesses. Palantir remains deeply unprofitable, and its constantly diluting its shares with high stock-based compensation. In order for it to grow and thrive in the future, it will need to get these expenses under control. In 2020, Palantir's top 20 clients contributed about $33.2 million of its annual revenue, up 34% year-over . Rivals may emerge in response to geopolitical tensions, or existing competitors may become more aggressive, which could lead to increased competition and pricing pressure for Palantir. I anticipate a potential uptick in number of RSUs granted this year due to the share price being lower and the hiring of many more employees (3300 last reported as of 3/14/22, up from 2900 as of Q4 earnings.) In total, Palantir grew revenue by 36% year-over-year to $392 million. For example, if the 2023 Chinese spy balloon incident results in increased scrutiny of government contractors, it could impact Palantir's ability to secure and maintain these contracts. All rights reserved. Anticipated Insider Selling Beyond 2021: Its not over, so dont wave the victory flag yet. Palantir's Q3 report proved a double-edged sword: solid growth amongst most key metrics amid a bit of a slowdown in government-side growth and kicking off a -20% share decline since. Over the past three months, Palantir's insiders sold 12.6 million shares while buying 11.8 million shares. Favorably, Palantir managed to grow its total customers, however, by 55%, reaching 367 customers by the end of 2022. Palantir can't compete with google and Microsoft. He still holds over 750k Class A shares but also about 1mm Class B options. Is this happening to you frequently? This indicates its aggressive dilution -- which has been a major issue ever since its direct listing -- is finally ending. The good news is that Palantir's revenue and EBITDA are growing at a rapid pace, and may ultimately grow faster than the number of shares. In previous articles, I stressed the importance of the Com segment, which could be the long-term growth driver of Palantir. In 2021, Palantir's revenues have increased by 41% Y/Y to $1.54 billion, which helped the company to achieve its long-term goal of growing its revenues annually by 30% or above through 2025. Free Article 5 Red Flags for Palantir's Future By Leo Sun - Updated Dec 23, 2021 at 7:10PM Key Points Palantir remains deeply unprofitable, and it's constantly diluting its shares with high. As you can see, Karp has two lots of Class B RSUs vesting, one of which is 35,000,000 over 10 years and another which is 3,900,00 over 10 years; this equates to a quarterly vesting installment of 877,500 shares and 97,500 shares, respectively. While management has not explicitly provided guidance on this in terms of dollars, Karp did mention in the Q4 call that: there will be a normalization that will get us into a range where you would see in a software company within the next 18 months, latest two years.. If Palantir is able to grow its net margins to the industry average of 19.66%, it will generate US$3.21BN in net income. Total revenue grew 34% year-over-year to $433 million, beating estimates by almost $15 million. Shares of Palantir Technologies Inc (NYSE:PLTR) are continuing their upward trend after announcing a significant partnership with Ukraine's Ministry of Digital Transformation on Thursday. In general, investors should closely track this metric as the wider this gap gets, the more shareholder value Palantir offers. As mentioned already, the amount of stock-based compensation is going down. Karp, who is the CEO of Palantir, sold 14.1 million shares, or just under 11% of his stake, for $135 million. Invest better with The Motley Fool. Cl A/Palantir Technologies Inc Dividend Stock News and Updates. Alexander Karp: Karp is the CEO, as you all know, and was responsible for the largest insider selling since direct listing, which came from primarily, but not limited to, the tax obligations associated with his 70mm+ expiring options. It's not too late for Palantir to change its trajectory. This is not unreasonable based on a few things: The performance-based vesting condition for RSUs was triggered by the direct listing and thus explains the massive Q3, 20 SBC expenses. In addition, it targets new industries or geographies and develops marketing strategies, strategic partnerships, and collaborations to reach new customers. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. All rights reserved. By the second quarter of 2021, that figure had. Sankars only Form 4 this year is related to the vesting of 375,000 Class B shares (quarterly RSU vesting from the 2020 Plan) and other Class A RSUs vesting (2010 Plan). Surprisingly, PLTR announced its first profitable quarter in Q4, which marks a new era for the firm. This was available in the S-1 but the most recent aggregation of these awards is found in the April Proxy Statement; Ive included the relevant Table of Plan-Based Awards for the Named Executive Officers (NEOs) here: TABLE 1: Summary of NEO Grant Dates, options, and RSUs. Stock-based compensation (SBC) used to be Palantir's Achilles heel and a deal breaker for many investors. On the other hand, the Russia-Ukraine war provides ground for Palantir to acquire new domestic customers, particularly in the defense sector. In the third quarter of 2020, Palantir had, . You should focus on the columns that say "Options Unexerciseable" and "Number of Shares of Stock That Have Not Vested" This is pretty complex so I keep a running spreadsheet on this that I update quarterly as I've done with Karp's other options, etc. In Q3 2021, Palantir reported $0.04 in adjusted EPS and revenues of $392 million. I'm also clearly long on Palantir. Entering text into the input field will update the search result below. From the press release: Bronstein, Gewirtz & Grossman, LLC notifies investors that a class action lawsuit has been filed against Palantir Technologies Inc. ("Palantir" or the "Company) ( NYSE: PLTR) and certain of its officers, on behalf of all persons and entities that purchased, or otherwise acquired Palantir securities between November 9, 2019 . The collaboration aims to improve the delivery of software that supports defense systems. Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, could play an essential role in how government and businesses operate, Copyright, Trademark and Patent Information. I have no business relationship with any company whose stock is mentioned in this article. At $22, I was quite bullish on the stock, but at $26.6 I think it's near the top of the range it's likely to trade in for quite some time. This happened despite hiring aggressively as Palantir is hunting for talents while most tech companies, even the Big Techs, are laying off massively (PLTR Hunting Season is Open). Palantir is developing and tailoring its products and services in the commercial segment, creating specialized solutions for specific industries or customizing its existing solutions to fit unique needs. Let's assume a company grows 30%, like Palantir. As usual, Cohen converted 345,018 Class B shares to Class A and sold these for tax withholding obligations. However, it is important to notice that there is a risk related to the newly granted RSU. However, Palantir's stock compensation expense has decreased since it went public, so the number is likely growing slower than it had been previously. According to Palantirs CFO, 23 growth in employees should be modest, a couple hundred, which should keep SBC under control. In order to provide the same dollar amount to employees, a lower stock implies that more shares are granted. This remains relevant since the company generally recognizes SBC expenses on a straight-line basis. Palantir ( NASDAQ:PLTR ), a software company that specializes in big data analytics, reported Q1 results last week. Growth at a Good Price 8.49K Follower s Follow Summary Palantir stock has been heavily diluted since it went public in a 2020 direct listing. In that light, maybe cutting Palantir some slack is fair. S-1/A (Registration Statement filed on 9/21/20). On the one hand, stock-based compensation is a non-cash expense, which preserves cash and has helped Palantir operate with positive free cash flow: PLTR Stock-Based Compensation (TTM) data by YCharts. Surprisingly, PLTR announced its first profitable quarter in Q4,. Scan this QR code to download the app now. Shares outstanding, float, it's all up. Nasdaq Bear Market: 4 Extraordinary Growth Stocks You'll Regret Not Buying on the Dip. Reddit, Inc. 2023. Cash from operations (six-month): $139 million, up from a $226 million outflow. We believe in augmenting human intelligence, not replacing it.". On the surface, Palantir's recent stock moves have been perplexing. Still, it could make it more challenging for Palantir to expand globally, particularly in regions affected by the conflict. To elaborate on this, most of the new options are vesting on a quarterly (some are monthly, but they're a drop in the bucket) basis, but this is unlikely to trigger insider selling because all the options have expiration dates of either June 2030 or August 2032. Since going public, Palantir has managed to maintain revenue growth in the high 40% to low 50% range. Its float, according to FinViz, was 1.63 billion. But the downside is a share count that is continually expanding. Motley Fool Issues Rare "All In" Buy Alert. The big dawgs will rule the ai landscape imo. In my view, it's going to perform about in line with the market, or keep trading in its established range, in the near term. Figure 1: Palantir Share Counts and Dilution since Direct Listing. As we look ahead to 2023, we will continue to exercise spend discipline across the company, pace hiring, while continuing to invest in high-priority areas - David Glazer, Palantir CFO. This is unlikely to repeat aside from a small uptick we saw in Q2, 2021. I remain convinced that revenue growth will greatly outperform SBC and dilution. Hi there! While Palantir . Here we assess the quarterly advancements toward the "dilution normalization. Please refer to the previous articles to see: how we should incorporate it into our models (Why 99% of PLTR DCFs Fail). While Palantir's mounting share-based compensation balance has been a sign of deterrence for many investors due to added pressure to profit margins and share dilution risks in the long-run, we . Overall, Palantir's partnerships and collaborations have positioned the company to continue to grow and innovate, with the potential to enter new markets and drive its expansion in existing ones. Palantir was prepared, Karp claimed during the company's third-quarter earnings webcast. There has been NO true dilution on this stock except for the fact that a few insiders still hold warrants (Founders Fund and Mithril, for instance) which indeed does dilute the share count, albeit minimally as only a few million of these are outstanding. Upon exercise, the holders will receive shares of our Class A or Class B common stock, which may subsequently be sold. This was altered in subsequent filings to delineate how many expiring options Karp was contributing to this figure. government.". This table is quite verbose and each of the footnotes (that I didnt include) basically tell you more information about the vesting schedule of each set of options and Restricted Stock Units (RSUs). 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