Alright, let's get one thing straight: Palantir. The name alone sounds like something straight out of a Tolkien novel, and honestly, their valuation is just as fantastical. Third-quarter earnings are dropping November 3rd, and everyone's asking if it's a buy, sell, or hold. Me? I'm asking if we're all collectively losing our minds.
Morningstar slaps a 2-star rating on them, calls them "moderately overvalued," and throws out a fair value estimate of $115. $115! That implies some insane enterprise value/sales multiple. Are they selling magic beans or AI software? Because from where I'm sitting, it's hard to tell the difference these days.
They've got a "narrow moat," apparently, based on "switching costs and intangible assets." Oh, intangible assets? That's code for "we can't really explain why they're valuable, but trust us, they are." Switching costs, I get. Once you're locked into a system, it's a pain in the ass to get out. But a moat? More like a puddle. Plenty of companies are nipping at their heels in the data analytics game. AWS, Snowflake, ServiceNow... they're not exactly slouches.
And then there's the whole "AI company with a framework that organizes disparate datasets and facilitates optimized decision-making" spiel. Right. Translation: they’re selling snake oil to companies that don't know any better and are desperate to jump on the AI bandwagon.
The bulls are all hopped up on the "premier AI software" narrative, claiming Palantir is primed to dominate the digitization and automation trend. They say it allows for the "democratization of machine learning." Which, if you ask me, sounds like a recipe for chaos. Last thing we need is everyone and their mother thinking they're an AI expert.
Then there's the "new boot-camp-style sales effort" driving growth in the US commercial segment. Boot camp? Are they selling software or brainwashing?
The bears, on the other hand, point out that Palantir's market is limited to "entities that coalesce with Western ethos." Let's be real, that's code for "they only work with countries we like." Which, offcourse, caps their potential.
And the decreasing cost of AI inference and the convergence of LLMs? That's a fancy way of saying the barriers to entry are dropping. Palantir might be king of the hill now, but that hill is about to get a whole lot more crowded.
Oh, and let's not forget the dual-class share structure. Because nothing says "good governance" like giving the founders unchecked power to make "overzealous noncore investment opportunities." Without, you know, pesky shareholders getting in the way.
Palantir's sitting on a pile of cash – $900 million, plus $5 billion in marketable securities. No debt. Sounds great, right? But here's the thing: what are they doing with all that cash? Are they investing in actual innovation, or just hoarding it like some digital Scrooge McDuck?
Speaking of cash, I gotta vent about something totally unrelated… My landlord just raised my rent again. Says it's the "market rate." Market rate my ass. It's highway robbery, plain and simple. And the worst part? There's nothing I can do about it. Unless I want to pack up all my stuff and move into a cardboard box. Which, honestly, is starting to sound appealing.
Look, Palantir might be a decent company. Maybe. But that valuation? It's insane. It's based on hope and dreams, not on cold, hard numbers. It's a house of cards waiting for the slightest breeze to knock it all down. Then again, maybe I'm just a grumpy old cynic who doesn't understand the magic of AI. But let's be real... I ain't buying it.
