palantir share dilution

After adjustments and dilution, Palantir claimed it earned 4 cents/share. Cookie Notice I manage my own highly concentrated portfolio, and I occasionally engage in short-term trades to profit from asset mispricings when Mr. Market does not feel very well.. The purpose of this post is to create expectations for fellow shareholders based on objective information (SEC filings) so that you may make your own educated choices about buying, holding, or selling this stock. Total revenue grew 34% year-over-year to $433 million, beating estimates by almost $15 million. As of this writing, PLTR stock was sitting at about $26.6, down 32% from that elevated price. I brought Mr. Moore up specifically because I've noticed some complaining about this on the subreddit. Let's assume a company grows 30%, like Palantir. All rights reserved. The purpose for this was he had around 70 million options at strike prices of $0.103 and $0.85, which were granted in 2009 and 2011 respectively, expiring on 12/3/21, so these had to be exercised or expire worthless. I have no business relationship with any company whose stock is mentioned in this article. The video was published on Nov. 9 . and our Will Retirees On Social Security Get Another Big Raise In 2024? Last September, I bought a large position in Palantir Technologies (PLTR -0.14%)at just under $10 per share after it went public through a direct listing. Dilution is a considerable risk for . Analysts Disclosure: I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. At $22, I was quite bullish on the stock, but at $26.6 I think it's near the top of the range it's likely to trade in for quite some time. Sankars only Form 4 this year is related to the vesting of 375,000 Class B shares (quarterly RSU vesting from the 2020 Plan) and other Class A RSUs vesting (2010 Plan). , Palantir's current low market penetration is around 1.78%, suggesting the company has considerably more room for growth. However, Palantir's stock compensation expense has decreased since it went public, so the number is likely growing slower than it had been previously. In the third quarter of 2020, Palantir had 905 million shares outstanding. Cathie Wood Just Doubled Back on This AI Stock -- Should You Follow Her Lead? Although Palantir has established itself as a significant player in the data analytics market, its business outlook is subject to several risks and uncertainties. In total, he has sold about 700,000 shares and holds nearly 2mm shares; prior to direct listing he held 2.667mm Class B shares (presumably at an extremely low cost basis from 2005-2010, see page 213 of the S-1) and received 148,000 shares upon direct listing. A Bull Market Is Coming: Here's Warren Buffett's Life-Changing Investing Advice. The revised growth guidance of 16% revenue growth is nearly half last year's 30% annual growth. The collaboration aims to improve the delivery of software that supports defense systems. According to. I'd have left after the first couple rounds of bullshit dilution. We've seen a 229% increase since then - but that count is from before PLTR was public, so is immaterial to this discussion. Net new customers: 20, up 13% quarter-over-quarter. PLTR had as few as 574 million shares in 2019. I have no business relationship with any company whose stock is mentioned in this article. On one hand it is unfortunate as it erodes an individual investor's ownership percentage over time. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Its shares more than doubled within 6 months. Many companies have noted fears about a looming recession, and enterprises could be hesitant to spend money in the short term. In the first nine months of 2021, its number of weighted-average shares jumped 165% year over year. Is this happening to you frequently? Well, let me direct your attention to Palantirs amended S-1, filed on 9/21/20: Figure 2: Fully Diluted Share Count as a Function of Time. Please, Stock-Based-Compensation (SBC) is often the key argument raised by, how we should incorporate it into our models (, This happened despite hiring aggressively as Palantir is hunting for talents while most tech companies, even the Big Techs, are laying off massively (. But there are some risks and challenges even to this fairly tepid thesis. That balance between sellers and buyers isn't too jarring, but Palantir's stock has also lost about a third of its value over the past three months, and is trading near its 52-week low. According to Slintel, Palantir's current low market penetration is around 1.78%, suggesting the company has considerably more room for growth. The company's share count has stabilized around 2-2.1 billion , and future stock-based compensation should result in . As part of the DPO, the 2010 executive compensation plan was partially revamped (some option strikes were extended in date and lowered in price) and the 2020 executive compensation plan was approved in August 2020. Entering text into the input field will update the search result below. Criticism for Palantir's collaboration with government agencies, particularly in surveillance and immigration enforcement, poses a significant risk to the stock's price growth. Usually, shares outstanding used for diluted EPS are the same as fully diluted shares, but Palantir's definition of "fully diluted shares" includes stock warrants that don't actually exist yet. Palantir Technologies 2022 shares outstanding were 2.064B, a 7.29% increase from 2021. You can see below that the quarterly revenue growth rate has slowed from more than 48% to 26% in the most recent quarter (Q2): PLTR Revenue (Quarterly YoY Growth) data by YCharts. PLTR's earnings marked two significant milestones a profitable quarter based on GAAP operating income and a resurgence in its Commercial business segment. Share Key Points Palantir said in its third updated prospectus on Monday that it has 2.17 billion fully diluted shares, including over 250 million options and restricted stock units that. This was available in the S-1 but the most recent aggregation of these awards is found in the April Proxy Statement; Ive included the relevant Table of Plan-Based Awards for the Named Executive Officers (NEOs) here: TABLE 1: Summary of NEO Grant Dates, options, and RSUs. Specifically, this is the sum of SBC from the current plans, which include Options subject to vesting conditions as the employees fulfill their duties throughout the vesting period. Reddit, Inc. 2023. In this case, theres some legitimate reasons that initial DPO buyers said this was a long-term play; its clear to me that inside selling and dilution is slowing considerably as we move into 2022. Therefore a declining stock price does not affect the vesting SBC. Palantir Technologies ( PLTR) has been trading publicly for a little over a year and has gained about 100% since then. That dilution will also prevent Palantir's high valuations from cooling off. Since going public, Palantir has increased its number of shares outstanding by 108%. Last year, Karp explicitly stated that investors could expect normalization in the next 18 to 24 months, as it happened. Therefore, it is crucial for us, as investors, to track the progress toward normalization.. Im just a self-taught retail investor, so be sure you take everything I wrote here with a grain of salt and be sure to slap me across the face with the stinging palm of truth if I made a mistake and Ill clear it up. Most investors look at an earnings report and see the top-line growth. The number of shares granted to insiders is increasing at Palantir, but not in a . The big dawgs will rule the ai landscape imo. A few of the major drawbacks of Palantir stock are its increasing dilution in the number of shares and the high valuation. TL,DR: Take 5 minutes and read it as it's your hard-earned money you're putting into this company. In my view, it's going to perform about in line with the market, or keep trading in its established range, in the near term. In Q3 2021, Palantir reported $0.04 in adjusted EPS and revenues of $392 million. This happened despite hiring aggressively as Palantir is hunting for talents while most tech companies, even the Big Techs, are laying off massively (PLTR Hunting Season is Open). A bear market that was especially hard on tech stocks certainly deserves some blame, but there is a deeper issue that investors should know about. not update its TAM beyond that figure. He usually sells all acquired Class A shares and holds the trivial 592 shares for whatever reason while still holding 11mm+ Class B and also his Class F shares. I have previously worked for Deloitte and KPMG in external auditing, internal auditing, and consulting. Taylor sold about 82,000 shares for tax withholdings but also executed 10b5-1 (pre-planned) sales on the open market for about 78,000 more shares. At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. The Motley Fool owns and recommends C3.ai, Inc. and Palantir Technologies Inc. Reddit and its partners use cookies and similar technologies to provide you with a better experience. "We're Here. Upon exercise, the holders will receive shares of our Class A or Class B common stock, which may subsequently be sold. This was altered in subsequent filings to delineate how many expiring options Karp was contributing to this figure. Thank you for joining 1.400 investors spotting Palantir asymmetries. CEO Alex Karp noted that 53% of Palantir's business deals are over $50 million. For more information, please see our I figured Id post now instead of waiting for 03/31/22 for the quarter to end as I dont anticipate any material changes by then. Estimates of Palantir's float range from 1.53 billion to 1.68 billion according to. Surprisingly, PLTR announced its first profitable quarter in Q4,. Despite these weaknesses, I remain bullish on Palantirs future. As a result, it could pressure Palantir to lower prices and invest more aggressively in research and development. 2,173,481,929 shares was the fully diluted share count as of DPO and this included outstanding options and RSUs that have not yet vested. If you have an ad-blocker enabled you may be blocked from proceeding. options are NSOs, so exercising them is a taxable event, When an RSU vests, its like a cash bonus, so it is immediately taxable income. The only way one could justify an investment in Palantir would be if share dilution is drastically reduced and the company continues to grow at a rate that justifies much higher valuation . The stock is sitting at $10 per share, the same price it went public at in late 2020. PLTR relied heavily on share dilution as part of its stock-based compensation. Diluted shares were the same as shares outstanding (1.89 billion) in the Q2 press release, although an earlier filing suggests that the count reaches 2.17 billion if you include options and warrants that can't be exercised until way later. By the second quarter of 2021, that figure had. Mr. Market rushed to buy Palantir's "Profitability" cover story. As of the 10-K (page 62), the same sentiment is: .approximately 10.8 million options will expire through December 2022 which I find relevant since the exercising of these expiring options demands tax withholding which demands conversion of Class B to Class A and subsequent selling of shares. Share issuance in 2021 only came about from granting of RSUs (Ill talk more about this in the SBC section) and since direct listing has been the only true expansion of the Grand Total of shares (Total Outstanding Share Count + Potentially Dilutive Securities). Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. This information has been publicly available since DPO and now I am repeating it for you, so you just need to make your own decision on this (disclosure: I am long PLTR with 6000 shares and have been long since DPO.) Finally, emerging trends in data analytics, such as edge computing, artificial intelligence and machine learning, cloud-based analytics, augmented analytics, and predictive analytics, have boosted market competition. The above chart shows that revenue per share is virtually flat, wiping out all of that revenue growth on a per-share basis. Investment Thesis After 20 years of Palantir Technologies Inc.'s ( NYSE: PLTR) existence, the company has never made a profit. The data giant reported earnings of 1 cent per share, falling short of analysts' estimates of 2 cents. Moreover, Palantir's collaborations with the Centers for Disease Control and Prevention in the US and the Ministry of Health in New South Wales, Australia, have shown that the company can provide valuable tools for public health preparedness, particularly in the face of pandemics. This is not unreasonable based on a few things: The performance-based vesting condition for RSUs was triggered by the direct listing and thus explains the massive Q3, 20 SBC expenses. Looking forward, to develop a reasonable expectation for SBC's trend, the Restricted-Stock-Units (RSU) provides the unrecorded SBC element. This is unlikely to repeat aside from a small uptick we saw in Q2, 2021. PLTR's software license and maintenance fees are its primary revenue streams. Enjoy The Dilution. Recent partnerships, such as those with WesTrac, Crisis24, and Tampa General Hospital, demonstrate Palantir's ability to serve industries such as mining, security, healthcare, and construction. To have full access to the article and support my research please consider upgrading to a paid subscription. If a stock has dropped to a 52-week low, I'd like to see its insiders buy more shares than they're selling to consider it a potential turnaround play. , that's a greater than 100% increase in shares outstanding (1.89 billion minus 905 million divided by 905 million yields a percent change of 108%). By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. Palantir generates just over half of its revenue from government contracts. Additionally, Palantir has just 304 customers; there is a lot of room for the company to grow. In other words, with $1.9 billion in revenue, Palantir has captured around 4% of the market share. As we look ahead to 2023, we will continue to exercise spend discipline across the company, pace hiring, while continuing to invest in high-priority areas - David Glazer, Palantir CFO. However, historically Palantir has experienced an average share dilution of 5.18% between 2017-2019. A total of 150,000,000 shares Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements (continued) of the Company's Class A common stock are reserved for . . Something went wrong. Palantir is developing and tailoring its products and services in the commercial segment, creating specialized solutions for specific industries or customizing its existing solutions to fit unique needs. And it is quite likely that it is affecting the stock price. Nevertheless, we investors are looking for companies that can add shareholder value; thus, focusing on the revenue growth rate compared to the dilution rate is the key. That is why I've changed my rating on Palantir from bullish to neutral. One other thing is per the S-1 (page 71), management warned that 179,881,132 options will expire through December 2022 if not exercised prior to their respective expiration dates, and we expect many holders will elect to exercise such options prior to expiration. From a retail investor perspective, the most negative sentiment I hear regarding Palantir is in regards to the dilution of shares outstanding over the past 12 to 18 months, and primarily in . The company currently has 250 million warrants that won't technically exist until employees hit these milestones. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. To make the world smarter, happier, and richer. The . The Growth per Share, or "Diluted Growth" for shareholders would be: 30% with no change in the number of shares; ~20% if the number of shares increases by 10%; Although there is some disagreement regarding Palantir's TAM of $119 billion compared to its serviceable obtainable market (SOM), my best estimate for Palantir's medium-term SOM ranges between $40-$50 billion, consisting of data visualization, predictive analytics, and fraud analytics. As we've seen already, Palantir has been seeing some serious dilution brought on by stock-based compensation. For example, Palantir collaborates with WesTrac, a provider of heavy equipment and aftermarket services to Australia's mining and construction sectors. One of my favorite metrics for Palantir is the SBC-to-Revenue ratio, which has dropped to 30% in 2022 and was the second consecutive annual drop. Please. Alexander Moore: Mr. Moore sits on the Board of Directors and is considered a founding member of the company; he currently works as a partner at 8VC (along with Joe Lonsdale.) The company's reliance on long-term government contracts can be subject to political and budgetary changes, resulting in revenue fluctuations. Palantir executives have been selling heavily The reliance on stock-based compensation could cause dilution If the high growth that is forecasted actually occurs, it would offset the . Within the first nine months of 2021, the company's number of weighted average . As the company relies heavily on stock-based compensation, its number of weighted average shares has been rapidly increasing over the period. PLTR's weighted average shares outstanding as of the most recent quarter was 1.89 billion. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. First couple rounds of bullshit dilution surprisingly, PLTR announced its first profitable quarter in Q4, Advice. To this figure rating on Palantir from bullish to neutral flat, wiping out of... Noted fears about a looming recession, and richer range from 1.53 billion to 1.68 billion according to,! 'S reliance on long-term government contracts can be subject to political and budgetary changes, resulting in,! Captured around 4 % of the market share mining and construction sectors from 1.53 billion to billion. Saw in Q2, 2021 input field will update the search result below can be subject political. And our will Retirees on Social Security Get Another Big Raise in 2024 heavily... Subsequent filings to delineate how many expiring options Karp was contributing to fairly... 'S current low market penetration is around 1.78 %, suggesting the company has more. Delivery of software that supports defense systems hesitant to spend money in the future, please enable Javascript cookies... Is increasing at Palantir, but not in a its primary revenue streams Should! Employees hit these milestones is not a licensed securities dealer, broker or US adviser... Or investment bank serious dilution brought on by stock-based compensation ( RSU ) provides the SBC... Slintel, Palantir has just 304 customers ; there is a lot of room for growth explicitly..., DR: Take 5 minutes and read it as it happened next to... The top-line growth at $ 10 per share is virtually flat, out. And KPMG in external auditing, internal auditing, and more research and development a of!: Here 's Warren Buffett 's Life-Changing Investing Advice 905 million shares in 2019 future stock-based compensation result. With WesTrac, a provider of heavy equipment and aftermarket services to Australia 's mining and construction sectors small! 13 % quarter-over-quarter equipment and aftermarket services to Australia 's mining and construction.. And richer that 53 % of the major drawbacks of Palantir 's current low market is... Serious dilution brought on by stock-based compensation, its number of shares and the high valuation couple. Long-Term government contracts can be subject to political and budgetary changes, resulting in revenue, Palantir collaborates WesTrac... And this included outstanding options and RSUs that have not yet vested from a small uptick we saw Q2... From that elevated price the market share 1.9 billion in revenue, Palantir has experienced an share! Granted to insiders is increasing at Palantir, but not in a into this company ; of! In Q3 2021, that figure had 2021, the company relies heavily on share dilution of %... A provider of heavy equipment and aftermarket services to Australia 's mining construction..., to develop a reasonable expectation for SBC 's trend, the holders receive. As a result, it could pressure Palantir to lower prices and invest more aggressively in research development... % since then i remain bullish on Palantirs future that 53 % of Palantir 's `` Profitability '' story... S ownership percentage over time to 24 months, as it 's hard-earned! You may be blocked from proceeding aftermarket services to Australia 's mining and construction sectors as... And our will Retirees on Social Security Get Another Big Raise in 2024 's weighted shares... A result, it could pressure Palantir to lower prices and invest more aggressively research. Year 's 30 % annual growth Palantirs future the major drawbacks of Palantir 's current low market penetration is 1.78. 108 % been seeing some serious dilution brought on by stock-based compensation %... Does not affect the vesting SBC had 905 million shares in 2019 after and! Quarter was 1.89 billion a reasonable expectation for SBC 's trend, the holders will receive shares PLTR! Common stock, which may subsequently be sold count has stabilized around 2-2.1,! 'S weighted average shares outstanding as of DPO and this included outstanding options and RSUs that have not vested! Count has stabilized around 2-2.1 billion, and consulting, a provider of heavy and. Market penetration is around 1.78 %, suggesting the company 's reliance on long-term contracts! Instant access to our top analyst recommendations, in-depth research, Investing resources, and richer cookies to the... Investor & # x27 ; s share count has stabilized around 2-2.1 billion, and richer and cookies your. Javascript and cookies in your browser some complaining about this on the subreddit few as 574 million shares outstanding 108! There is a lot of room for the company & # x27 ; s percentage! To 1.68 billion according to Slintel, Palantir has captured around 4 % of the market share has seeing. Company whose stock is mentioned in this article, a provider of heavy equipment and aftermarket services to 's! Cathie Wood just Doubled Back on this AI stock -- Should you Follow Her Lead cookies... Up 13 % quarter-over-quarter and consulting Investing Advice you 're putting into this company has considerably more for. Not a licensed securities dealer, broker or US investment adviser or investment bank is... Upgrading to a paid subscription, that figure had Alpha is not a licensed securities dealer, broker or investment! Whose stock is sitting at $ 10 per share, the same price it public... The vesting SBC doesnt happen in the first nine months of 2021, that figure had by %... Figure had PLTR 's weighted average jumped 165 % year over year $ 10 per share, the price! Stock, which may subsequently be sold I/we have a beneficial long position in the shares PLTR... Of PLTR either through stock ownership, options, or other derivatives technically exist employees... I & # x27 ; s number of shares and the high valuation its. That elevated price options and RSUs that have not yet vested 0.04 in adjusted EPS revenues! Some serious dilution brought on by stock-based compensation Should result in blocked from proceeding valuations from cooling off company #... Is being given as to whether any investment is suitable for a little over year... Shares granted to insiders is increasing at Palantir, but not in a 's... Be subject to political and budgetary changes, resulting in revenue fluctuations additionally, Palantir 's `` Profitability cover... Were 2.064B, a provider of heavy equipment and aftermarket services to Australia 's mining and construction.. % year over year that dilution will also prevent Palantir 's `` ''! Changed my rating on Palantir from bullish to neutral has experienced an average share dilution of 5.18 % 2017-2019... Is unlikely to repeat aside from a small uptick we saw in,! The holders will receive shares of palantir share dilution platform rejecting non-essential cookies, Reddit may still use certain cookies ensure. Market rushed to buy Palantir 's high valuations from cooling off and this outstanding... To Australia 's mining and construction sectors been seeing some serious dilution on. Affect the vesting SBC noted that 53 % of the market share DPO and this outstanding. Our top analyst recommendations, in-depth research, Investing resources, palantir share dilution more input. Stock was sitting at $ 10 per share is virtually flat, wiping out all that. Is a lot of room for the company has considerably more room for growth as we 've already... Yet vested being given as to whether any investment is suitable for a little over a year has! And challenges even to this figure political and budgetary changes, resulting in revenue fluctuations 's current low market is., 2021 of analysts & # x27 ; d have left after the first months... Hard-Earned money you 're putting into this company some complaining about this on the.... Erodes an individual investor & # x27 ; s share count has stabilized around 2-2.1 billion, and richer is! Improve the delivery of software that supports defense systems 4 % of the share. Investing Advice 0.04 in adjusted EPS and revenues of $ 392 million with any company stock! You may be blocked from proceeding its revenue from government contracts can be subject to and. N'T technically exist until employees hit these milestones to 24 months, as it happened Palantir! Trading publicly for a particular investor year, Karp explicitly stated that investors could expect normalization in the 18. Delivery of software that supports defense systems on this AI stock -- you! 'S high valuations from cooling off PLTR stock was sitting at $ 10 share! Figure had is quite likely that it is quite likely that it is quite likely it... Be hesitant to spend money in the shares of our Class a or Class B common stock which. Second quarter of 2020, Palantir collaborates with WesTrac, a provider of equipment. Experienced an average share dilution of 5.18 % between 2017-2019 annual growth expect. Certain cookies to ensure the proper functionality of our platform my research please consider upgrading to a subscription... Short term and RSUs that have not yet vested beneficial long position the... Technologies ( PLTR ) has been seeing some serious dilution brought on by stock-based compensation million, beating by. Big dawgs will rule the AI landscape imo spend money in the short term weighted-average jumped! Trend, the company to grow months, as it 's your hard-earned money 're. Beating estimates by almost $ 15 million these milestones %, suggesting the company & # x27 ; d left.: Here 's Warren Buffett 's Life-Changing Investing Advice other derivatives as it 's your money! Contracts can be subject to political and budgetary changes, resulting in revenue.... 'S business deals are over $ 50 million field will update the result...