The Good and Bad News for Palantir Stock Investors

Stock Market

Palantir Technologies (NYSE:PLTR) is a well-known player in the U.S. cyber-defense industry. The company won’t easily dominate the global cybersecurity market. Despite the high price, we still rate PLTR stock a “B” for its potential rally in 2024.

Palantir Technologies is a favorite among momentum-focused technology stock investors. For instance, Cathie Wood’s Ark Invest purchased over 1.5 million shares of Palantir stock earlier this year. The CEO of Palantir Technologies recently confessed to the company’s challenges in entering a non-U.S. market. Prospective investors should consider Palantir’s obstacles and opportunities before deciding financially.

The Highs and Lows for PLTR Stock

So, let’s start with the positive news. Palantir Technologies announced a one-year continuation of its U.S. Army contract “to continue operating and enhancing the Army Vantage data-driven operations and decision-making platform.”

The extended contract’s total value is $115.04 million. Bank of America Global Research analyst Mariana Pérez Mora called Palantir’s Army contract extension “unexpected,” since they expected the original contract to expire soon.

Now for the bad news. Palantir Technologies CEO Alex Karp has basically admitted that his company is having trouble breaking into Europe’s public-sector defense market.

“They’re making terrible investments in tech… I’ve screamed at people in Europe. But it’s not going to change,” Karp said.

Previously, Palantir Technologies warned that growth for the company in continental Europe “remains challenging.” France and Germany have been specific sticking points as Palantir struggles to expand into Europe’s cyber-defense industry.

Hence, investors shouldn’t solely focus on Palantir Technologies’ progress in the U.S., since the company isn’t as successful in Europe.

Palantir’s Growth and Valuation

Palantir Technologies isn’t a “Magnificent Seven” company, but Palantir stock more than doubled in 2023. So, will the stock take a breather or pull back before the next leg up?

It’s the old growth-versus-value debate, as Palantir Technologies is certainly progressing as a business venture buy may appear overvalued. It’s encouraging that Palantir achieved four consecutive quarters of GAAP-measured profitability. Plus, the company beat Wall Street’s earnings expectations in this year’s third quarter.

Palantir Technologies’ investors should have momentum on their side in 2024. Yet, Palantir’s GAAP-measured trailing 12-month price-to-earnings ratio of around 250x is significantly higher than the sector median P/E ratio of 27x to 28x.

This shows that much of Palantir Technologies’ expected future growth might already be priced into PLTR stock. Thus, value-conscious stocks traders may choose not to invest in Palantir at the current share price.

Palantir Stock: It’s a Personal Decision

Prospective Palantir stock investors should consider their priorities before making any financial decisions. How important is a company’s growth to you? And, how much emphasis do you put on a company’s valuation?

Investors will also want to weigh Palantir Technologies’ success in the U.S. public-sector cyber-defense market versus the company’s struggles in Europe. Overall, PLTR stock will be appropriate for some people’s portfolios, but not everyone will like it, so we’re assigning it a fairly confident “B” grade.

On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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