Palantir's Growth Spurs Investor Enthusiasm, But Caution Warranted on Valuation Given Inconsistent Cash Flows and Share Dilution Risks
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Palantir's business has seen tremendous growth recently, largely driven by AI and enthusiasm among investors. However, room for caution is warranted regarding the stock valuation.
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Financial history shows inconsistent cash flows, but recently positive results due to capital-light business model and seasonal deals. New AI product driving more sales.
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Current stock valuation assumes very high, potentially unrealistic growth rates in free cash flow. Government contracts more reliable than commercial.
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Share dilution from stock compensation has reduced value of individual shares significantly over time. More dilution likely.
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Conservative discounted cash flow model with lower growth assumptions shows shares are overvalued. Stock price doesn't reflect risks and offers no margin of safety.