- Brent Thill from Jefferies acknowledges Palantir‘s (PLTR) strong fundamentals, including 30% top-line growth and high margins, but remains skeptical due to its extraordinarily high valuation, currently at 50 times revenue.
- The lack of significant institutional investor involvement in Palantir could serve as a potential catalyst for stock movement, although Thill warns that historical patterns of similar overvalued tech stocks suggest a risk of correction.
- Thill suggests that a trigger for a reassessment of Palantir’s stock could be either a continued rise in its valuation multiple or a miss in quarterly performance, especially in a tech market where other giants are underperforming.
Brent Thill, a senior software analyst at Jefferies, joined ‘Fast Money’ on CNBC to discuss the future trajectory of Palantir Technologies (PLTR) after its remarkable stock performance. Thill acknowledges the exceptional fundamentals of Palantir, highlighting their 30% top-line growth and high margins, which he credits for the company’s success in an AI-driven market where other tech giants like Google (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN) have underperformed in cloud services. Despite these positives, Thill expresses skepticism regarding Palantir’s stock valuation, pointing out that with a market cap equivalent to that of Adobe (ADBE) and Snowflake (SNOW) combined, the stock’s price-to-revenue multiple is in “la la land,” far beyond any reasonable comparison.
The discussion also touches on the lack of significant institutional investment in Palantir, suggesting that this could be a potential catalyst for further stock movement if institutional investors decide to engage more heavily. However, Thill warns that historical precedents, such as the valuation peaks and subsequent drops of Snowflake and Datadog (DDOG) during the COVID period, suggest that Palantir’s current valuation might not be sustainable. He notes that while there’s short-term momentum and strong fundamentals, the stock’s multiple at 50 times revenue is unprecedented and could be a trigger for a correction if it continues to escalate or if Palantir misses its quarterly numbers.
When asked about what could trigger the street to reassess Palantir’s valuation, Thill points to the potential for the stock’s multiple to either continue rising in the short term or face a significant correction if fundamentals falter or if broader tech sector health deteriorates further. He concludes by emphasizing the uniqueness of Palantir’s current valuation in the market, questioning whether the stock can maintain its lofty multiple amidst a backdrop where other tech companies are struggling.
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