TOP STORY
🚀 Palantir Surges 11% After News of Nasdaq Listing

🚀 Palantir ($PLTR) has been absolutely flying this year - up 297% in 2024 alone, well over 10x the return of the S&P 500.

📊 The company has a lot going for it, from its stellar earnings reports to its addition to the S&P 500 index - but its recent surge is being driven by the company’s rare decision to move its stock listing from the NYSE to the NASDAQ.

👀 So let’s unpack Palantir, its meteoric rise, and its decision to shift exchanges, and investigate whether the company’s incredible momentum is here to stay or just a flash in the pan…

🏆 So, What Does Palantir’s Actually Do?

🛡️ I’ve always thought of Palantir as just a defense company, and while that’s how it started, Palantir has expanded a lot in the last few decades.

🥷 The company was founded in 2003 by Peter Thiel (a co-founder of PayPal), and was initially focusing on helping US defence & intelligence agencies fight terrorism.

💽 Palantir helped the agencies turn messy, unstructured data into actionable insights, and over the past decades, Palantir has adapted its products for many other customers.

💼 Today, Palantir’s business is split into three main platforms:

• Gotham: Built for governments and defense agencies for everything from battlefield intelligence to public health responses.

• Foundry: Tailored for the private sector, Foundry helps businesses “activate their data and analytics in a dynamic system for closed-loop operations.” Foundry is used by a wide array of customers across many different sectors, including Airbus (aerospace), Merck (healthcare), Morgan Stanley (financials), and many more.

• AIP (Artificial Intelligence Platform): A newer offering (launched in April 2023) focused on integrating AI capabilities, serving both government and commercial clients.

💰 Palantir’s average contract value per customer is ~$6.5M, and its largest customer is the US government, which still accounts for 44% of revenue.

🚀 Palantir’s Meteroic Year

🤯 So, with that in mind, how the heck has Palantir soared nearly 300% this year, surpassing even Nvidia? Here are the key reasons:

🤑 Incredible Earnings

Palantir’s recent earnings are being called a ‘victory lab’ of an incredible year, with the CEO Alex Karp putting it bluntly:

In the most recent Q3 earnings:

• 💰 Revenue grew 30% year over year to $725.5M

• 🇺🇸 US commercial revenue soared 54% year over year to $179M

• 🤑 Profits rose to $144M, up more than double from last year

• 🤝 Customer count grew 39% as Palantir diversified its customer base

• 📈 Q4 Revenue is projected for ~$770M, higher than previous estimates.

🤖 A Unique AI Story

👀 Palantir’s CEO Karp has been outspoken about the company’s unique approach to AI, saying that LLMs are “commodities” and the valuable asset is “how you manage the commodity.”

🎯 While most of the industry is focusing on improving LLMs, Karp says Palantir has focused on capitalizing “on the rich context within the enterprise.”

📲 In plain English, Palantir allows companies to quickly build their own AI apps rather than trying to offer a one-size-fits-all solution.

🍦 A great example of this is how Wendy’s used Palantir’s AI platform to optimize their ‘ $1 Frosty operations,’ using Palantir’s AI to spot shortages before they happen.

🤖 While Palantir has been leveraging AI in its products for years, things really took off in April 2023 with the launch of AIP, Palantir’s ‘Artificial Intelligence Platform’ - a specialized platform designed to integrate AI capabilities while ensuring data security and compliance.

🚀 Palantir’s aggressive and unique approach to AI has so far served them well and catapulted the company to a market leader in AI.

📊 Switching to the Nasdaq + Inclusion in the S&P 500

And finally, the reason for Palantir’s most recent surge on Friday - the company’s decision to switch its stock listing from the New York Stock Exchange to the Nasdaq, effective Nov 26.

🤔 Why does this matter? Well, analysts widely expect this means the company will join the popular Nasdaq-100 index, which is tracked by a huge array of ETFs (including $QQQ, $XQQ, $ZQQ, $HXQ, etc.) - meaning anyone who holds a Nasdaq-100 ETF will automatically buy Palantir, driving the stock up even further.

📈 Palantir was also recently added to the S&P 500 in September 2024, driving a 14% stock jump as, like the Nasdaq listing, this also forced large institutional investors and ETFs tracking the index to buy the stock.

🚨 But wait… before you bet the house on Palantir shares, it’s worth noting that analysts have a largely pessimistic view of the stock, with an average price target of only $33.73, 49% below its current price 😰

But before we dive into the reason why, a quick word from our sponsor Harvest ETFs!

PRESENTED BY HARVEST ETFs
🪙 Crypto Mining, Fintech, and Blockchain | The Blockchain Technologies ETF

📈 Bitcoin and other cryptocurrencies are surging after Trump’s election win!

⚙️ Access Canada’s very first blockchain technologies ETF, the Blockchain Technologies ETF (HBLK:TSX), which offers pure-play exposure to crypto mining, payment providers, and companies dedicated to the development and implementation of blockchain technologies.

🇺🇸 Donald Trump could be gearing up to be the most pro-crypto president in US history. The President-elect promised to launch a strategic national crypto stockpile if elected. This endorsement, combined with broader deregulation in the financial space, could be huge for the blockchain space.

HBLK | Blockchain Technologies ETF

Benefits:

• Leading technology mega-trend in crypto and blockchain technology

• Unhedged currency

• Competitive management fee

^{*See Harvest ETF Disclaimer at the end of the newsletter}

TOP STORY CONTINUED
😰 Is Palantir Overvalued? Analysts seem to think so…

🚨 Despite everything going for Palantir, analysts are largely pessimistic about the stock, with an overall price target 49% below the current stock price according to TipRanks. Here’s why:

🏔️ A ‘Mount Everest’ Valuation

While analysts largely agree the fundamentals are strong, many believe the valuation is too high, with Brent Thill from Jefferies saying:

🏔️ Other analysts call out that the stock is trading at an ‘unprecedented premium’ and at ‘Mount Everest valuations’, at 45x forward revenue - more than double the 18-20x forward revenue of its peers in ‘AI-exposed SaaS’ like Cloudflare, ServiceNow, and CrowdStrike.

🤑 High Retail Investor Ownership

Another unique aspect of Palantir is its high retail investor ownership - with retail owning ~48% of the shares, compared to a 33% average retail ownership among the Mag 7 tech stocks.

⚔️ Analysts argue that the stock’s popularity among retail investors could be a double-edged sword, as it can lead to “quick and significant multiple compression should the stock go out of favor.”

💡 In Conclusion

🎯 To sum it up, like a lot of big tech these days (and perhaps even more so), Palantir is ‘priced for perfection’, so keep in mind that when you’re buying Palantir, you’re making a strong bet that its fundamentals won’t just continue to be strong, but immaculate.

🧐 As always, I hope you use my write-ups in The Weekly Buzz as a starting point to do your own research, and I'm looking forward to reading your thoughts on Palantir on Blossom!

🙏 Thanks again to everyone who reads the Buzz to the end, I appreciate you so much! As a thank you, for the first 10 people who subscribe to the Blossom YouTube and leave a comment on our recent live stream “🤖 AI & the Markets: Bubble or Boom”, I’ll send you a $5 Starbucks gift card ❤️

SUPPORTED BY CBOE CANADA
🚨 New ETF Alert: LongPoint Launches ForAll Core & More U.S. Equity Index ETF

🤝 As you guys know, we’ve partnered with Cboe Canada to keep you updated on all the new ETF listings, but this week we have not only a new ETF hitting the markets, but a new ETF provider: LongPoint ETFs!

🥳 Steve Hawkins, the former CEO of Horizons ETFs (now Global X), launched LongPoint back in April, and this week the company launched its first ETF: the FORU - ForAll Core & More U.S. Equity Index ETF

📊 FORU is designed to track the ForAll Core & More U.S. Equity Index. The index is designed to have a static core component, an alpha seeking component, and a strategic allocations component.

🇺🇸 The index dynamically allocates between the components using a rules-based algorithm, providing exposure to the U.S. equities with a technology focus, without exposure to fossil fuels. The index also rotates to defensive positions in periods of high volatility and can strategically allocate to iShares Gold Bullion ETF Hedged.

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

👇 Click to see the full post!