Source: Spyro the Dragon / Shutterstock.com
Big Data Analytics Company Palantize (NYSE:PLTR) is a government favorite and was considered very attractive due to the number of contracts it received. Many investors believed that PLTR stock could reach new heights after its 2020 IPO; however, they were wrong.
PLTR stock started its stock market journey on a positive note and hit $35 in January 2021, but has been trending lower ever since.
The company hasn’t been able to reach $30 per share since hitting that point and has traded below $20 for the past six months. Currently, PLTR shares are trading for $8.95, much lower than many investors expected.
I still think Palantir has huge potential and their contracts are proof of the solid products they offer. However, frustration with Palantir’s stock is only growing. With that in mind, let’s dive deeper into why I think you should consider PLTR a great long-term game.
Palantir’s business grows
Palantir recently made headlines for the contracts it was awarded. The company received a $36 million military prototype contract with the Army for the development and integration of its TITAN program. Further away, Guide, the federal government’s third-largest consulting firm, announced an alliance with the company for Palantir’s “Foundry software platform to help clients navigate complexity.” He also received a contract from the US Space Systems Command to $121.5 million.
These are just a few of the contracts Palantir has won recently, despite the looming recession. It shows the potential of the business to generate income regardless of market conditions. It also proves the solidity of its products. Skeptics have criticized the company for relying heavily on government contracts, but it has also taken significant steps in the commercial segment.
Palantir’s Q1 results weren’t so bad
Investors weren’t happy with Palantir’s first quarter results, but if you take a closer look at the numbers, they weren’t that bad. In the first quarter, the company said $446 million in revenuean increase of 31% year over year.
Additionally, Palantir added 37 new customers during the quarter. This is a major trend that goes unnoticed by investors. The growth rate of the company’s revenue from the commercial customer is constantly increasing, while the revenue from the public sector is decreasing. In the last quarter, the commercial revenue growth rate was 54%, while the government revenue growth rate was 16%.
It continues to expect annual revenue growth of 30% or more through 2025. If it manages to hit that target, its revenue numbers could be significantly high. Palantir may not be showing profits today, but the long-term picture is attractive and promising in all respects.
Conclusion on the PLTR stock
Investors fearing recession might flee PLTR stocks, but now is the time to buy and hold them for the long term. The company is in a growth phase and aims for long-term growth. It’s a company that’s not working for the next quarter or the next two quarters, but it has a clear plan for the next five years.
It has healthy revenue growth and strong future prospects. Next quarter’s results may look lumpy, but don’t consider PLTR stock a game of a quarter. It is trading today at a reasonable valuation and if the company achieves 30% growth within a few years, it will be a great deal.
At the date of publication, Vandita Jadeja did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.