Do you think now is a good time to buy PLTR?
After being included in the S&P 500 stock price index, $Palantir (PLTR.US)$ showed a significant increase on the first day. However, there are certainly examples of popular stocks continuing to soar immediately after the announcement. For example, $Tesla (TSLA.US)$ saw its stock price soar by about 70% in 2020 after entering the S&P.
Just because a stock is included in the S&P 500 does not guarantee that the stock will perform well in the long or short term. For example, $Super Micro Computer (SMCI.US)$ has plummeted since being added to the S&P 500 index earlier this year.
Long-term outlook
The extent to which Palantir's stock price will rise in the coming years will be greatly influenced by whether the company can accelerate revenue growth, rather than whether it will be included in the S&P 500 index. The main reason is the valuation, as the stock is trading at a forward price-to-earnings ratio that exceeds 23 times the analysts' estimates for 2025, which is incredibly high for a company that grew revenue by 27% in the second quarter.
Therefore, what is crucial for Palantir is to continue accelerating revenue growth from this point onwards. The company, driven by artificial intelligence (AI) solutions, has been steadily increasing commercial revenue in the USA. While revenue from the US government is also improving, faster growth is necessary to justify the company's current valuation. To aid in this, the company has partnered with Microsoft to leverage Microsoft's various government cloud services to offer its solutions.
However, while Palantir is a great company, the current stock price valuation may be a bit too frothy as a buying opportunity. Therefore, it would be advisable to consider purchasing after the exaggerated publicity of being included in the S&P has settled.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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