Bets on PLNT after the Earnings Call

May 10, 2023

3 min read

Palantir Q1 2023 Earnings Call Summary:

Revenues: Palantir reported strong revenue growth, up 30% year-over-year, beating analyst expectations. This growth was driven by both the expansion of existing customer accounts and the addition of new customers.
Profitability: The company also reported GAAP profitability, emphasizing the firm’s ability to control costs and increase efficiency as it scales.
AIP (AI Program): Palantir’s new AI Program (AIP) represents a significant growth opportunity for the company. The company expects this to increase the total addressable market and to enable the company to penetrate the mid-market and small business segment.
Customer Base: Palantir is investing in expanding its customer base outside its traditional government and large corporate clients. The company is making efforts to lower the entry point for smaller businesses to leverage its software.
Investment in Growth: The company confirmed its commitment to investing aggressively in growth, despite being profitable.

Buy Scenario:

Palantir’s strong revenue growth and profitability make a compelling case for the buy scenario. The launch of its AIP is a potential game-changer, which could significantly expand the company’s total addressable market.
The company’s disciplined approach to expenses and focus on efficiency could continue to drive profitability, providing a strong foundation for future growth.
If Palantir can successfully penetrate the small business and mid-market segment, it could unlock a significant new revenue stream.

Probability of Success (Buy Scenario): High (70%) – Given the current strong financial performance and the potential for future growth from AIP and expansion into new markets.

Sell Scenario:

While Palantir has demonstrated strong growth, the company is also facing increasing competition in the data analytics and AI space. This could put pressure on the company’s growth rate and profitability.
There is also a risk associated with Palantir’s aggressive investment in growth. If these investments do not yield the expected returns, it could negatively impact the company’s profitability.
The success of the AIP and the company’s efforts to penetrate the small business and mid-market segment are not guaranteed. If these initiatives do not succeed, it could negatively impact the company’s future growth prospects.

Probability of Success (Sell Scenario): Low (30%) – Given the current strong financial performance and the potential for future growth, but taking into account the potential risks associated with competition and new initiatives.

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