Hey this is tom, and yesterday was the anniversary of the all-time high of palantir 39 22 cents on february, 8th 2021.. Today we're looking at whether one year later at 13 and a half dollars per share, which is one-third of that. This is still an attractive investment. Do i still think it's a one trillion dollar company? What are the risks? What changed? What am i looking forward to seeing in the queue for financials in a few days, everything that you wanted to know about here, one year later after that high and where i think the company is headed, but as always, don't click? Nothing, don't smash, nothing don't buy.

Nothing, let's do this, so, let's be honest. Investing in palantir is like looking into the abyss and saying bring it nothing about. It is normal! It's chaotic! It's strange! It's weird! It's a agent of chaos. I've never seen anything like this.

Nothing about this company is normal. Everybody did spax last year, these guys direct listed while everybody basically chasing up their political correctness, they're doing the opposite, moving to denver speaking their mind about china and the enemies of the u.s things i'm passionate about. But most people don't like to hear because it's not nice, it's not kumbaya around the campfire and mainly the two main guys in the company could not be more different. One is a hyper corporate guy, peter thiel.

The other one is like a albert einstein. Look alike. One is a socialist left wing radical, the other one is a right wing radical, i mean they are nothing alike and yet they get along for 17 and on years, like it's nobody's business. How can this be? What's the story with this company even two decades into its existence? Nobody really knows what they're doing i mean nobody really understands and that's part of the appeal.

That's part of the magic, in fact that was intentionally done, to create a moat to create a monopoly and take over a category that they themselves created. So that's kind of the genius of this company. If you actually think about it, and as always in my videos, the bottom line comes first and what i'll do first is i'm going to give you my updated target price, but before i do that, let me give you a quick disclaimer. You need to relax.

Listen! I got a lot of money in this company. A lot of money, 40 of my entire portfolio is in this company, which is highly insane crazy and not normal, which is exactly what palantir is my opinion, but there ain't gon na be anything new about this company. For another five to ten years, it's going to be a bumpy ride until we find out. If this is the next microsoft slash amazon, it's another five to ten years, i'm either going to be a multi-millionaire, or this is going to go to the toilet.

Nobody really knows, and we won't know for another decade, so we can enjoy these back and forth and these articles and the screaming matches, but none of this matters, if you hate the stock, if you don't like the valuation, just don't invest. What's the problem, why do people get so emotional about it? There's so many other stocks. You can go and talk about. If you don't like volunteer, that is fine.

I totally get it, i'm not even mad. Now. The second disclaimer i want to actually mention here is the stock based compensation. There's a few things i want to clarify.

Palantir has basically given up half of their company. Over the past year, they went from 900 million shares to 2 billion shares in the course of a year, and a lot of people are bothered by that and that's okay, if you don't understand why stock based compensation is critical. The survival of this company in its upcoming battles against microsoft and google, then it's okay, just don't, invest now i'll, explain in a second why stock base comp and giving away half the company at this stage actually makes a lot of sense. But if you don't get it just don't, invest now.

The third disclaimer has to do with me and my channel. A lot of you have noticed that i'm doing less and less volunteer content lately. The reason is because i don't want to be, and i'm not a palantir channel, i'm not going to make a video every time alex carp or peter thiel farts or you know, takes a wet one. I don't care, i'm only going to talk about important, critical stuff or basically, these deep dives, as i'm about to do right now.

I don't want to make daily volunteer content, there's enough of channels that can do that for you that ain't me, i'm just gon na give you stuff that i think are critical and important like in this video, because i think, a year later after the 39.22 per Share while we're at 13 and a half, i owe you an update where i stand and what has, if any, changed. So let's do this. Where do i stand right now? So if you remember the company direct listed at 10, actually on january 24th, not too long ago, it dipped all the way to 11.7, which is the all-time low. I guess, since that dpo now we're back at 13 and a half dollars now, in my personal opinion, and again, this is not financial advice.

Just my own opinion, which might be inaccurate, might be wrong, might be the ramblings of a madman. In my own personal opinion, without you know talking about the 1 trillion valuation, in my own personal opinion, any price below 35 per share is a really good price for this company. At this stage, if you want to be extra, careful extra conservative, anything below 25 is still good enough. In fact, i'm going to show in a second my ultra bare case dcf, where i actually get to a 25 price, even maxing, out the worst possible scenarios for this company, and now, let's go through my dcf now.

I just want to mention that these numbers you're, seeing on the screen right now, they're extremely bearish. This is my bare case dcf. I want to be as bearish and conservative as possible. So what i did here, i assumed a 30 growth until 2027.

Nothing beyond that. I also assumed 21 tax rate, i assumed a 10 discount rate and capex of almost 200 million dollars, which is quite more than i think, they'll use in the next five years, a four percent perpetual rate right here and, as you can see right here, 18 multiple. Although i think they deserve 25 right here, we have the debt, which is zero, the cash which is 2.3 billion and not to keep you on for too long. This is the actual result, so the average, for me, is 49 billion dollars.

Current price is 26 billion dollars. If you want it in share price here, it is 13.2 versus 24.46, 85.66 upside just for the absolute bare case of this company. So if you want a simple rule of thumb, bottom line, my target price is anything below 25. Is a buy for me at this point and if you just needed that that's fine go right ahead, no hard feelings! If you want to hear my full analysis about the business model and what i'm expecting to see in the q4 plus the potential weaknesses of the company and the risks grab, a coffee grab a beer and let's do this.

So, let's start with the strength of business. I think that topic does not get enough attention on youtube and even on places like seeking alpha, so the business model for palantir is extremely sticky, and even though it sounds like a bad thing, it's actually good, so basically just the financials and the stuff that our Public knowledge can teach us a lot about the strength of the business, the stickiness of the clients and what they got going on for the next 5-10 years. Listen just in q3 alone. They signed 54 new deals over 1 million per deal 18 out of those 54 new deals were 10 million and above their top 20 clients have contracts for another 6 to 10 years that ain't a walk in the park, not to mention that they have deal value Of 3.6 billion dollars already secured.

That means basically that their annual revenue as it stands right now is secured for the three years that are about to follow without selling any more services. That is insane just look at december. In december alone, they announced four new deals worth about 100 to 200 million dollars and just in q3 alone, they increased the customer count for them by 20, so the customer count went to over 200 from 150 160 in a single quarter. These are not things that are easily achieved and the one thing i feel that a lot of people don't understand is the progress in the free cash flow.

Most of you already understand that they're about to close the year at a significant positive free cash flow. In fact, for the first three quarters of the year, they were at 320 million dollars of free cash flow. Now, if you just look at what happened on the previous year in the same period, the first three quarters of the prior year, there were negative 285 million of free cash flow. That is insane such turnaround in the year.

Just makes the whole conversation about them not being efficient, profitable laughable, not to mention the fact that in q3 they were scratching the 400 million for revenue jumping 36 to 392 million from the previous year. Not to mention the fact that their top 20 customers went up on average from 31 million per customer to 41 million in customer. That is an insane change in the single year. So if you ask me how they're gon na finish the year, i'm gon na tell you right now: it's gon na be 1.5 billion dollars in revenue and 400 and free cash flow, and that's just the beginning.

So now, let's talk about valuation and a lot of these so-called experts like to tell you that 17, multiple for price to sales for palantir is so high. It's unreasonably high, so first of all, a forward price to sales for planetary is actually 13 just the point of reference, but let's assume it's 17 for a second instead of comparing it to companies like jp, morgan and ford, let's compare it to similar companies. Companies like snowflake like crowdstrike like datadog, so i have it right in front of me. So snowflake has a price to sales of 80.

crowdstrike 30 datadog47, and i just want to remind you that snowflake, with its 80 multiple on price to sales, which is more than four times higher than palantir, actually got a massive investment from warren buffett. So honestly, i don't know how accurate it is to say that palantir is expensive at 17. Multiple you know time will tell not to mention the fact that their balance sheet is as clean as a whistle no debt, 2.3 billion dollars in cash and three times more assets than liabilities without goodwill. This is as good of a balance sheet that i've ever seen.

Very not typical for a company, that's considered to be a loser and a 17 years underachiever seems like they know what they're doing look, how extreme their valuation is currently trading at 26 billion dollars. Market cap just add up the cash they have and the remaining deal flow, which is pretty much just cash alone. It's already six billion dollars, just the cash the company has or will have in the next few years i mean valuing a company like that. With this growth at 26 billion dollars is just a joke.

Now i don't want to talk a few words about the moat of the company. Now this is a company. That's been developing a superior product since 2003 for millions and billions and tens of billions of dollars paid by uncle sam. The department of defense actually paid a lot of money to volunteer to build this tool that eventually birthed foundry.

Now it's going to be very hard to replicate. In fact, on the commercial side, nobody out there can give you a full stop shop platform like piloteer. Of course, there are specific competitors companies that will give you an erp system companies that will give you preventative maintenance systems, but nobody can give you one spaceship to cover everything you need in your data management system. Nobody has anything like this, not for long.

I think at some point, microsoft and google are going to jump into this business because it's freaking amazing, but until they do palantir, will remain a monopoly and will continue to create its network effects, which it's been doing phenomenally, for example, with skywise, which is pretty much A derivative of foundry for airlines, every airline which gets skywise actually adds on top of it every supplier they work with every subcontractor they work with, so that network effect that patent is creating is going to be so strong by the time the competition actually comes in. I think they're going to be primed for success, but time will tell now. I don't know a lot about the government side of business. Actually, nobody does, but at that side, they're literally monopoly look at the lawsuit they just had with the department of defense or air force, where they literally forced them to use their platform.

Because there's no other solutions. I mean there. It's sticky, the information is sensitive. The clients just wanted to keep going they're, never going to lose the government business nobody's even close to them on the government side of business, but since i see the vast majority of their upside and the future growth in the commercial sector, i'm not really too obsessed About the government side, but that thing is rock solid.

Now, let's talk about the things i'm looking forward to seeing in the q4 financials, so those are kind of the weaknesses i'm looking for them to fix. So the first thing i want to see is the commercial growth excluding this pack. If you take away this clients - which i don't really see how it's relevant, but okay, if you take away these backlines, how much independent clients they actually have, i want to see growth on the commercial sector now. The second thing i want to see is actually the breakdown of the client concentration right now.

It's way too concentrated the top 20 percent are holding more than 50 percent of their business. I'm looking at the notes right here. It is insane it's too risky. You can't have that client concentration that has to grow, and they are working on this.

They just added 34 new clients and actually increased by what 20 their clan base just in the past quarter alone, but the work is still ahead of them. Much more needs to be done now. The other thing is geographical concentration. Just looking at my notes, here, 60 of their business is coming from the us.

It's way way too much as a geo concentration. I understand they're focusing on the western world, but there's other opportunities. Now they are actually present in france and in the uk, but that thing has to expand row rest of the world. We need to see more business just to eliminate some geopolitical risks now.

The other thing i want to talk about is the sg, a 750 million in 2018 that ballooned all the way to 1.3 billion in the trailing 12 months. Now that's kind of in line with the revenue 600 to 1.4 billion in that same period, and it does include a lot of the new sales force editions and the sbc the stock based comp, which is not really a cash flow item. I get all that, but still way too high sgna of 1.4 billion when you have 1.3. Sorry, when you have 1.5 in revenues, is just too high.

This needs to come down and needs to come down fast and as far as my final thoughts or conclusion or whatever it is, you want to call it. I think that this is good. Whatever happened in the past two months, weeded out a lot of the tourists, the reddit guys, the hypes, the retail investors that wanted just to make a quick buck, it cleaned up the investor base. Right now, i feel that the investor base for piloteer is as clean as it ever was just the people who are actually in it for real for the long term and i'm loving this.

The only thing i hope for is the stock price goes up slowly. We don't pick up more of these tourists, which i hope we won't now. The second thing i want to talk to you about right now. This is the cheapest.

The company has been since the dpo since the direct listing. It's not going to be that cheap for long again it might dip back and forth in the next few weeks, but as far as the next year or two years or three or five years, this is pretty much the last chance to get on it before it Goes up, i'm not telling you to do it, i'm just looking at it for myself, but honestly, i'm not gon na get off for the next five to ten years from the stock, so it doesn't really matter for me, and the final point is, i think data Is definitely the new oil and some, while all was critical and the most important resource up until now, data is taking over data is becoming like oil, microsoft, windows and amazon. Aws combined, everything is about data and whoever catches that is going to be the new king, and i believe these guys have an option to do it. They have what it takes.

Nobody really knows because there's no certainty in life, apart from the fact that we're all going to die we're going to pay taxes, everything else is available. Honestly, it is what it is. Thank you for watching. Thank you for the channel members and the patrons for supporting this channel next volunteer video in one year see you later.