Since it made its public debut, the meteoric rise in the shares of Palantir Technologies has sparked a debate in the potential overvalued positioning of the shares.
The stock of data analytics focused software firm Palantir Technologies Inc (NYSE: PLTR) remains one of the best-performing shares post-Initial Public Offering (IPO) of 2020. The firm, established in 2003, made its public debut on the New York Stock Exchange back in September 2020, and thus far, it has become one of the outstanding IPO success stories in a COVID-19 ridden year.
The company’s product superiority may be attributed to this growth but its continued rally in the past days can be attributed to two major news headlines about the firm. The company is set to host its inaugural demo day on January 26th. At the event, Palantir will be unveiling an upgrade to its two platforms Foundry and Gotham, as well as a series of new products.
Additionally, Palantir has announced the appointment of Accenture senior advisor Lauren Friedman Stat to its board. Per the reports on the appointment of Stat, she will be bringing in the industry-wide connections she obtained in her 15 years of corporate experience serving as an advisor to Fortune 100 companies.
The dual news has triggered a bullish disposition on the stock of Palantir which closed by 25.40% on Friday to hit a new all-time high price of $32.58 per share. This impressive daily percentage growth rate is a big compliment to the analytics firm with a surge of over 251% since its Initial Public Offering back in September.
Is Palantir Stock Overvalued?
Since it made its public debut, the meteoric rise in the shares of Palantir Technologies has sparked a debate in the potential overvalued positioning of the stock. At a current market capitalization of $56.76 billion, Palantir whom market analysts are expecting to declare a $1.07 billion to $1.072 billion in revenue in 2020 is currently valued at 45 times its sales value.
To picture the over-bloated valuation of the firm, the company’s growth is best compared with its contemporaries in the data analytics and software niche such as Datadog Inc (NASDAQ: DDOG), Mantech International Corp (NASDAQ: MANT), and Booz Allen Hamilton Holding Corporation (NYSE: BAH) to mention a few. While there is a bit of uniqueness in each of these firm’s software infrastructures and products, they are potentially bigger in breadth than Palantir. While Datadog has a Price to sales ratio of 60, Mantech International Corp boasts of a price to sales ratio of 1.6 and Booz Allen Hamilton ticks 1.7, a fair figure compared to Palantir’s 45.
At present, Palantir boasts two “buy” ratings, three “neutral” ratings, and three “sell” ratings from analysts.
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