Thinking of Buying Palantir Stock? You Need To See These 4 Charts First

Core Viewpoint - Palantir Technologies has experienced significant stock price growth in 2024, but its current valuation metrics suggest it may be overvalued compared to its peers in the software-as-a-service (SaaS) sector [1][8][9]. Valuation Metrics - The company's price-to-sales (P/S) ratio has reached an extraordinary 67.5, which is considered extremely high, especially in the software industry where a P/S of 20 is typically seen as expensive [2][9]. - Palantir's price-to-earnings (P/E) ratio is close to 400, indicating that the stock is priced for perfection and would require a tenfold increase in profits without a change in stock price to align with major tech stocks [3][7]. Market Position - Palantir's market capitalization stands at approximately $169 billion, making it the fifth largest SaaS company, trailing behind Salesforce, ServiceNow, Adobe, and Intuit [10]. - The company has the potential to rise in market cap rankings, but significant growth among its peers would be necessary for Palantir to triple its market cap [4]. Revenue and Operating Income - Palantir's total revenue for the trailing twelve months (TTM) is $2.646 billion, which is substantially lower than its peers, indicating a need for growth to justify its current market cap [11][12]. - The operating income for Palantir is $365.15 million, significantly less than that of its competitors like Salesforce, which has an operating income of $7.343 billion [6][12]. Recent Performance - The stock has surged by 332% year-to-date as of December 19, driven by accelerated revenue growth and expanded profit margins [8]. - The company has gained attention for its AI platform and its potential in the AI sector, benefiting from its status as a major contractor for the federal government [8].