Palantir Corporation (NASDAQ: PALANTIR) concludes a comprehensive partnership with a leading global automotive group of 14 iconic brands. Business with commercial clients is booming, but investors have been disappointed lately with the prospects for data collectors.
Palantir collects and organizes data on behalf of other companies and governments. In this way, the customer must better understand the processes and increase the efficiency of his organization. Founded in 2003, the company has been listed on the US tech exchange Nasdaq since September 2020 and currently has a market capitalization of US$15 billion.
Huge deal with Stellantis
Palantir’s circle of clients from prominent companies continues to grow. Today, Wednesday, the data aggregator announced a partnership with Stellantis – one of the world’s largest car manufacturers, which brings brands such as Alfa Romeo, Citroën, Peugeot, Fiat and Opel under its roof.
Stellantis will deploy Palantir foundry operating system across all company brands, commercial functions and manufacturing locations. With this, the automotive group wants to “accelerate the digital transformation into a sustainable mobility technology company, improve supply chain performance, increase vehicle quality, speed up deliveries and scale up marketing and sales activities.”
The new agreement expands Palantir’s existing relationships with Stellantis subsidiaries to include a global licensing of an ecosystem of 14 of the automaker’s brands.
Disappointing sales forecast
In light of the notorious volatility of the Blantyre stock, the price pendulum is likely to swing again in the afternoon after the US stock market opens. Just two weeks ago, the big data inventory suffered a daily loss of -22% after the company was disappointed with its sales forecast for the second quarter.
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The data specialist is forecasting $470 million in sales for the June quarter, nearly 3% below the expectations of analysts surveyed by Capital IQ. The outlook for adjusted operating margin is also likely to have annoyed investors: The ratio is expected to come in at 20% between April and June, which is down from 31% in the same quarter last year.
However, Palantir COO Shyam Sankar tried to explain that the sales forecast could be significantly revised upwards due to “evolving geopolitical events”. Much depends on “the timing of the contracts and the acceleration of events.”
The value of the stock is actually moderate
Palantir continues to operate unprofitably, and therefore it is reasonable to conclude that its market value of $15 billion appears to be overstated. However, the Nasdaq group’s price-to-sales ratio is just over 7, which is very moderate compared to the industry – especially when you consider that no other data processor can boast growth rates of +30%. The company should report its first net profit by 2024 at the latest, assuming the rate of expansion remains more or less the same.
Demand from commercial customers is increasing
Since its inception, Palantir has always worked primarily with intelligence, defense and security agencies, which has earned the data collector a good reputation. However, for about two years, the number of its commercial clients in particular has been growing rapidly, and according to the company, it has tripled in 2021. With the Stellantis deal, the Nasdaq Group issued another big statement in this area.
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Now, for those who believe in the mantra that data is the oil of the 21st century, Palantir should be in a great position to capitalize on the ever-increasing demand for data-driven software solutions.
Nothing for the weak nerves
However, for now, investors will continue to live with the huge fluctuations in the prices of the huge data sheet: daily fluctuations of 10-25% are by no means uncommon. In our view, risk averse stockbrokers should look elsewhere. However, for active traders, stock volatility offers trading opportunities with high potential returns.
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