Palantir Stung By Slow Government Contracting Business

Palantir Technologies’ business is largely driven by government contracts. So far in 2021, despite a new Department of Energy contract, the overall picture is not looking good:

The Department of Energy win could potentially add $18 million in incremental revenue per year, but Mielczarek says that, otherwise, the investment firm’s Dotted Line tracker shows that Palantir “had a fairly quiet first quarter for government bookings.”

Besides an early January $8.5 million Army TITAN prototype award, there were no other government contract wins in the quarter.

Palantir’s business is largely driven by government contracts, and so far in 2021, it’s not looking good

This stock trades at a rich multiple, so it needs rapid growth to justify that. The numbers aren’t much better on the commercial side of the business:

“Palantir’s commercial sales increased by 4% in the December quarter,” Mielczarek noted. “The new sales strategy is showing potential, but we believe that it is too early to bet on.”

Add that to the fact that 20% of their commercial business is a single customer, and this looks like an overvalued, moderate growth company with some serious embedded risks. I’ll be avoiding this stock.

For more on Palantir, check out these posts:

If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

Photo: Palantir co-founder Peter Thiel. “Peter Thiel” by jdlasica is licensed under CC BY 2.0

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s