You know warren buffett once said that time is the best friend of a great business and the worst enemy of a mediocre one, and i think, in the case of palantir, it's really evident how clear that is. Now i'm going to answer a simple question in this: video is palantir my biggest failure, or is this the beginning of a beautiful friendship between the man and his stock? And let me tell you a few things here so right now we have this exodus. People are leaving growth talks as if it was the titanic everybody's running away the same people who were screaming seven months ago that value stocks are dead fundamentals, don't matter everything is all about the story. The same people are now screaming at you value stock is the thing you need value.

You need profits, you need p e ratios fundamentals. Are everything and they're being led by mr winter schnitzel himself, jim cramer, who changes his opinion about everything every couple of months, depending on what the mood is? But the question here isn't: if the exodus from growth stocks to value stock is justified because that's a video on its own, the question is: should palantir be included in this category or not, because that question, if answered correctly, can make a lot of people a lot Of money and can cost a lot of idiots a lot of missed opportunities, so check this out. Let me take a sip of my tea. First.

Ah, sorry for the obnoxious vocals now check this out when we talk about companies that are not set up for inflation and high interest rates and what you would call fluff story stocks usually talking about stocks with a lot of leverage, a lot of debt on their Books, not a lot of sales to prove that what they got actually works and really not a lot of traction as far as you know, their business, it's a company that basically burns through cash doesn't generate any free cash flow and hasn't really shown us anything. Besides. A really cool story now the question is: why would volunteer be classified in this? If you actually have an idea about the fundamentals, this is a company with zero dollars in debt. Ever since 2021, they are a company that are sitting on 2.5 billion in cash, which means they don't need to take leverage or debt, which means they're completely insensitive to interest rates whatsoever, and this is a company that's about to close this 2021 in a few days.

At a 1.5 billion dollars, revenue with about 400 million in free cash flow people seem to forget that talent here is operationally profitable for three quarters. Already people don't understand that stock based computation that brings the actual profitability is not a cash flow item. It's an accounting item, so palantir will close this quarter with a 400 million in free cash flow for the year. Now we're also talking about a company that has some of the richest clients in the business i mean they have government clients, massive government clients, but also only fortune 500 companies really on its business roster.

So these are companies that are completely insensitive to marginal price increases. Due to inflation, so a company that has no sensitivity to increased rates and a company that can easily raise their prices with the clientele that they actually work with, that doesn't have a lot of competition. In fact, none and we'll talk about in a second that might change in a few years and doesn't really have to put any money in order to increase the output. So they don't have to invest in capex to increase the amount of services they provide because it's a sas business.

So the question is: should a company like that be included in bad growth stocks because i think the disparity here is actually very amusing palantir the company? Not volunteered the stock, but i think the company had one of the best years in its existence in 2021 and yet palantir the stock is lagging behind like a piece of fart that everybody just wants to forget about, because how embarrassing that was - and i think this Kind of dissonance, if you want to call it or arbitrage whatever you want to name, it, can create massive opportunities for people who actually understand what planeteer is and what it isn't, because what we have with palantir is a company with eighty percent gross margin. Yes, i just said eighty percent and companies is currently trading at nineteen price to sales and don't forget that this whole narrative of alex carp is now gone because the men finished selling the stocks he needed to exercise the options from 10 years ago. So alex carp. Won't be selling for at least a decade longer stock-based compensation that they gave out to attract some of the best employees in the market which they did is actually down by 40 percent in q3, so stock based comp is coming down.

Alex carp is done, selling their margins are phenomenal, free cash flow is insane, and yet people are talking about how this stock should be avoided at all costs. Unbelievable and here's the funny part. For the past few weeks we had a lot of short sellers jumped the boat. We went from three percent short interest to six and a half percent short interest on piloteers, so we doubled the amount of short interest in this company and i'm going to enjoy watching these guys get slapped by a rubber band.

Once this thing gets released because with every short selling pressure - and you have to understand that the current price is definitely affected by 100 increase in the short interest. Eventually, if the business is good, this rubber band will release whether you want to call it short squeeze or whatever it doesn't really matter, but they're playing a very dangerous game. The short sellers that is and they're going to get shellacked and i'm going to be sitting there with my popcorn and my tea, enjoying every goddamn second of it, and the 15 question here is how much is palantir worth even at the most bare case possible, because It's not really that difficult to give you the bulk case here and to say: well, this is a 500 stock. So the real question is what, if the interest rates actually go up to - let's say 10 percent - and let's say that talent here only grows.

Thirty percent per year for the next five years, they don't explode out of the stratosphere. Let's assume they're going to spend 200 million in capex in the next five years. Let's throw a bunch of bearish assumptions into the model and see in the worst case scenario, how much volunteers should be valued at right now. So, let's do it on the screen right now, you're seeing my dcf model for the bare case for palantir, i assumed a 30 annual growth from 1.5 billion onwards for the next five years, which is basically the bear case of volunteer.

If you know the business of this company, i assumed an 80 margin on the cost of goods. Sg. A and r d expenses are right here in front of you with a nice little growth every year, but i also added some bearish assumptions. For example, i assume that they will pay 21 nominal tax, which is not true.

Companies never pay 21 nominal tax. Also, i've absolute also absolutely ignored any net operating losses they have from former years which they can use for tax credits. So i don't think valentine will pay taxes anytime in the next five years, even if they make that money, because there is so much accumulated losses over the years. But let's assume they pay taxes from the first dollar.

Let's just assume they also have capex expenses of 200 million for the next five years, which is again a total insanity and, let's assume a 10 weighted average cost of capital. Let's just say that the interest rates go up to an insane amount, giving us a 10 weighted average cost of capital and, let's assume a four percent perpetual growth and, as you can see right here, it's going to give us a nice 44 billion dollars valuation. Now the company is currently trading at 29.2 billion, which means it has a massive upside but hold on a second. We still have the ebitda multiple.

You have to look at the multiples. This is a company that should be multiple at 25, but i use 18 just to keep it conservative for no reason other than that and i'm getting 55 billion dollars for that as well. I always average them out and if i average them out, i'm getting 49.6, and that is a 70 upside right now today and if you want to play around with this model yourself and change the numbers, the parameters and see what you get based on this template, You can get it on our patreon page, it's five bucks per month. You'll get this dcf as well as a bunch of others, participate in their zoom calls, but mainly you know, you'll be supporting the channel and i think that's important in itself as well, because we don't really try to monetize in any other way.

Besides the patreon page, which keeps the lights on, i guess so. The question is: if this company is 70 undervalued right now, on the worst bare case possible, we just presented to you an insane bearish assumption gives us a 70 upside. Why are people ignoring this because, essentially we have a company here, that's just about to give you 1.5 billion in revenue, with an extra three billion insecure transactions that they already have lined up. So, even if they don't sell any more projects, they can give you 1.5 billion for the next two years after 2021..

Nobody, of course, talking about that a company that just beat their own revenue expectations for q3 instead of 30 44. Of course nobody talking about that and don't get me wrong, i'm not complaining, i don't mind, buying a 70 upside stock at 15 and letting everybody just sit around and laugh at me and then we'll see what happens next, no problem. I also don't understand people who seem to be annoyed by this. If you're, a palantine investor and you haven't done margin or you haven't used options, you just straight up bought stock.

You shouldn't be concerned right now. You should be just sitting back drinking your tea and enjoying this carnage, because you know what's gon na happen after that, of course, if you use leverage or use options, that's a whole different deal, but i told you that this is a prime example of why i Don't use node options and not leverage, because now i get to sit back, enjoy and drink. My tea.