Palantir (PLTR) Stock | Long Term Analysis | Overvalued or Undervalued |

Transcript (auto-generated)

All right hello and welcome everybody to others talking about sphere today we’re talking about palantir ticker symbol pltr now this company is traded on the new york stock exchange and this is a company that went public in 2020 so very recent to the time of recording until the stock has made a lot of headlines in the news recently due to their very successful business model and so i want to talk about exactly how this company works i want to do in this video is give you a long term analysis on this company so you can learn about exactly whether you’d see this company as being maybe a company that you want to invest in maybe for 10 plus years we will also be determining whether the stock is overvalued or undivided as the stock may be more interesting towards maybe value investors or growth investors we’re going to talk about all that kind of stuff in this video anyway if you like this video please do like subscribe it’s about our channel and let’s get this content to more people so that more people understand how volunteer works and also all the stocks that we talk about work as well on our channel anyway thank you so much for watching without further ado let’s get started now let’s talk about the business model of this company if you go to they really hit this home and talk about exactly how the company works what we can see here is that this company is divided into three real sectors they’ve got the gotham sector they’ve got the metropolis sector then also the foundry sector now basically they work in terms of data analysis so what they’ll do is they’ll try to figure out maybe let’s say if they’re working in the gotham sector we’ll go over this in a moment here the gotham sector is for their government um you know things like that so with the united states they actually work with their intelligence community and also their defense community in order to determine maybe if you are interested in finding a criminal basically what the government can do is they can go up to palantir and be like we have the address of this person we have the name maybe the phone number things like that and palantir can attempt to find that person and really work hard to find that person they do deep analysis on data and so they do a lot of research to help the us government they also help hedge funds and banks and other financial services as they have listed here and that is under the metropolis sector and after the last sector the foundry sector they work with merck airbus fiat chrysler that’s how they have listed here but essentially the commercial businesses is what they work with there so those are really the three primary sectors that palantir works in and they do a phenomenal job in those sectors now to be honest that is an awesome business model working for the government and also big corporations like that in order to do maybe deep analysis on data and whatnot is actually a phenomenal business the government will need them consistently in order to determine maybe if they have a criminal or if they’re trying to find someone else besides that or something like that now i tend to be a huge fan of a company that works with the government because for example if you’re working with the government the government will likely try to keep you successful for a long period of time because they need you so for example defense companies are actually very important to the government and so they will try to keep them funded consistently in order to maintain them to be very helpful to the us government palantir is no exception and that is why i think palantir has a very strong stance with their gotham sector specifically because they work with the us government and the us intelligence community and things like that now i want to talk about the income specifically here because at the time of recording this is actually not a successful company in terms of profit or anything like that you can actually look at the value of this company and really be stunned to see that the company doesn’t seem to be very fair at this point but we’ll talk about all the kind of stuff right now now let’s talk about the book value of this company we could see the company has assets to its name but the company really doesn’t have a law assets compared to its debt the company currently has a book value of about a dollar and seven cents per share a couple of trades for about 28 dollars a share so that is as of the time of recording but the real key here is that this company has a very very very low book value relative to the trading value of the stock so with company having this low of a book value that means that the company’s trading value should really be held up by the net income of the company or the profit of the company now that is unfortunately not the case as we’ll talk about in a moment but just to really drive this point home despite the fact that the company’s assets have increased dramatically basically by about 100 percent we can see the company went from 1.21 billion dollars in assets to 2.26 billion dollars from 19 from 2019 to 2020. that is a dramatic increase in assets however their liabilities still remain to be a burden to the company the company currently has about 1.17 billion dollars in total liabilities or debt that the company is gonna have to spend a lot of money in interest payments and things like that to this large portion of debt so keep that in mind this is also relative to the assets making the company worth very very little that’s why they have a very low share of equity because the shared equity is simply the assets minus the debt of the company so when you calculate the book value per share of the company you are taking the shareholder equity and then buying it by the outstanding shares in the market so if there’s a low shareholder equity that means that the company is actually going to be worth very little relative to its trading value likely so lower shareholder equity is not good for the company or not good for the shareholders either now like i said earlier if they have more profit to their name let’s say they’re really profitable that could actually help increase the intrinsic value of the stock and help to justify a higher trading value for the company and so the assets become less of a worry at that point but unfortunately that is not the case here if we take a look at the net income of the company we can see the company currently is losing about a billion dollars a year and that’s not a deal for any company that actually means that the company’s entire assets could be wiped down a year because the company had about a billion dollars worth of assets and they have basically a net loss of about a billion dollars each year so that is a concern that i see for this company as they could go into a lot more debt now this company can turn this around and maybe the next year they’re going to be very profitable i’m not sure but unfortunately this company doesn’t seem to be very profitable at this point so that would mean that the company’s priced earnings is currently non-existent or zero or whatever you want to call it so that is unfortunate for the company and so as a value investor for me i don’t see this company as being a great value stock at all in my opinion but if you’re looking for this as maybe being more of a growth stock with your expectation of them significantly outpacing the market in capital gains and things like that then that may be interesting for you however this company still is losing lots of money and they would have to basically start making money in order to justify their current trading price now since this company is not making any money this is also a noticeable problem is that the company cannot buy back their own stock and they might have to issue more shares in the future in order to retain some cash in order to at least keep developing and maintaining stability in the company so let’s say they lose money and they need to take on more debt they may only be able to take on so much debt before people get concerned of lending to them so then they may need to issue more shares if the company issues more shares then this means that the company’s trading value is likely going to go down as time goes on because when there’s more shares outstanding in the market that means that the company is worth less and less and less per share technically this is by book value or the asset value per share of the stock so when there’s more outstanding shares in the market that means that the company has assets that need to be distributed across more shares so each share is worth less that is a problem for the company and that is not good for shareholders so definitely keep that in mind this company can also not afford to pay out a dividend because they just don’t have any money to pay you a dividend with so we have to understand those companies of course not going to be a dividend stock and they’re not going to buy back their own stock anytime soon but we have to understand as well that the company could be a pretty good growth stock if they’re able to turn away from this consistent loss now i like to look at 10 goals before i invest for me i don’t see this as an investment that i’m going to make anytime soon because hopefully the company does well but i just don’t know for sure there’s other companies that you can invest in there are plenty that plenty of profit for example the defense companies if you want to get into stocks that are similar and related to the government then you can get into other companies that are already very profitable and then they also will likely pay you a dividend buy back their own stock and do other things like that which will help to grow your investment this company right now seems to be too risky for me i don’t see this company as a value stock at all definitely not a dividend stock but it could be a good growth stock so it’s hard to say but at this point with the company losing lots of money it is still a very risky investment in my opinion anyway thank you so much for watching if you like this video please do like subscribe to the support channel and please comment down below and tell us if you think about this company we’ll try to get back to you anyway thank you again for watching and have a great day everybody.