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2021-03-18

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Palantir: Rally On

Summary Palantir's short interest declined by almost 27% in the last cycle. The stock seems to be f

Palantir: Rally On

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":327940396,"tweetId":"327940396","gmtCreate":1616054478915,"gmtModify":1703496932791,"author":{"id":3576547785025400,"idStr":"3576547785025400","authorId":3576547785025400,"authorIdStr":"3576547785025400","name":"Kimsu","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":2,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Good&nbsp;</body></html>","htmlText":"<html><head></head><body>Good&nbsp;</body></html>","text":"Good","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/327940396","repostId":1140777123,"repostType":4,"repost":{"id":"1140777123","kind":"news","pubTimestamp":1616053819,"share":"https://www.laohu8.com/m/news/1140777123?lang=&edition=full","pubTime":"2021-03-18 15:50","market":"us","language":"en","title":"Palantir: Rally On","url":"https://stock-news.laohu8.com/highlight/detail?id=1140777123","media":"seekingalpha","summary":"Summary\n\nPalantir's short interest declined by almost 27% in the last cycle.\nThe stock seems to be f","content":"Summary\n<ul>\n <li>Palantir's short interest declined by almost 27% in the last cycle.</li>\n <li>The stock seems to be forming a bottom, before it starts rallying again.</li>\n <li>Investors should avoid the fear, uncertainty and doubt, and remain invested in the name.</li>\n</ul>\nPalantir's (PLTR) shares are down 40% in value over the past two months and investment forums are rife with debates on the longevity of this price correction. Some bears are forecasting its shares to fall by another 50% in the near future but the reality may not be so bleak. Latest data actually reveals that short interest in the stock dropped by 26.7% in the last reporting cycle. This suggests that the stock is in the process of forming a bottom and it may not depreciate much, which should come across as an encouraging news for long-side Palantir investors. Let's take a closer look at it all.\n<img src=\"https://static.tigerbbs.com/84aaa95ba29871bd3ef8c8b179aa611e\" tg-width=\"1280\" tg-height=\"853\">Source: Palantir website\nThe dropping short interest\nFor the uninitiated, short interest is essentially the aggregate number of short positions that are open and yet to be covered. A sharp rise in the metric indicates that market participants have stacked up short positions in a particular stock, in order to profit from a potential price correction. Conversely, a sharp drop in the metric suggests that market participants have wound up their short positions as they perceive the stock to be fairly or undervalued, with limited downside potential. So, altogether, short interest helps us in gauging the Street's ever-evolving sentiment relating to any given stock.\nAs far as Palantir is concerned, its short interest dropped by a massive 26.7% sequentially and stood at 56.43 million at the end of the last cycle. For the record, the last short interest cycle spanned from mid-February to February-end and the data was disseminated only afew daysago. To put things in perspective, the company has about 1.75 billion shares outstanding which means that a mere 3% of its entire share total stood shorted.\n<img src=\"https://static.tigerbbs.com/11e73699ec600a696859f5389bf092a5\" tg-width=\"222\" tg-height=\"662\">Source: WSJ\nThis is a miniscule amount of shorting activity. I say this because companies that are surrounded by bearish narratives and have uncertain future prospects, generally attract speculative short-side bets in far greater numbers. I personally view short interest to be considerably high if it amounts to 20% or more of a company's total shares outstanding. But Palantir seems to be thinly shorted by this benchmark. For all we know, its ~3% short interest figure could be comprised of hedging-related bets with the sole purpose of minimizing volatility risk.\nI looked at other software stocks to get a different perspective but to no avail. Out of the 47 stocks in my study, 55% saw their short interest increase while 45% of the stocks registered a decline in their short interest. This more or less even split suggests that market participants wound up their short positions in Palantir largely because of their assessment of the stock and its underlying future prospects, rather than this short covering being driven by industry trends. Besides, shorting activity in Palantir was below industry average, thereby corroborating my view that it's a thinly shorted stock.\n<img src=\"https://static.tigerbbs.com/f4488d2e553eb79612e74a0b3aa05b72\" tg-width=\"348\" tg-height=\"823\">Data from individual quote pages on wsj.com\nThis begs the question - why aren't market participants shorting Palantir in the first place?\nCautious for good reason\nFor starters, Palantir's shares corrected by about 45% within February itself as a knee-jerk reaction to its Q4 results. This provided large gains for short-side market participants in a short time span, prompting them to unwind their positions and book healthy profits. So, that's one of the reasons why Palantir's short interest declined in the last cycle.\n<img src=\"https://static.tigerbbs.com/81236e9babe568b807c6641dac7fea6e\" tg-width=\"635\" tg-height=\"433\">Data by YCharts\nBesides, with this correction, Palantir's shares are now trading at relatively modest valuation multiples. Per YCharts, its price-to-sales multiple has dropped from a steep 40x in January to a much more reasonable 29.4x at the time of this writing, and the metric is quite close to its 52-week low of around 24x. This suggests that the stock is close to its rock-bottom prices and it might have limited downside potential going forward. So, short-side market participants may be best served by booking profits in Palantir and reallocating their capital in other, more lucrative, trade setups.\nAlso, I explained in my previous article that Palantir is transitioning to a recurring payment model. The company used to charge its customers in advance for multi-year agreements, but it's now going to bill customers on recurring intervals, like a software-as-a-service model but with some contract cancellation clauses. We won't be covering the same points again in this article but the crux of it is that this move is likely going to boost Palantir's commercial revenues. This growth prospect makes it a risky move to short Palantir's shares for the time being, at least.\nAlso, Palantir, historically, hasn't been too focused on its sales effort. Its&nbsp;10K reads:\n<blockquote>\n …our headcount has grown from 313 full-time employees as of December 31, 2010 to 2,439 full-time employees as of December 31, 2020…\n Our sales force remains relatively small, at about 3% of our total headcount.\n</blockquote>\nI thinkit's needless to say but having an understaffed sales team is bound to limit new order and sales growth. There just wouldn't be enough sales personnel to aggressively chase and convert leads.\nBut Palantir's management seems to be now laser-focused on remedying this oversight by significantly ramping up their sales team. They disclosed last month that the company is gaining access to IBM's&nbsp;2,500 sellers, which is dramatically up from the current 30 sellers. Its management also noted in their&nbsp;Q4 earnings call&nbsp;that they \"expect to add triple digit head count to our sales function this year\".\nThis heightened focus on revamping the sales function, and their transition to a more customer friendly payment model, is likely going to generate new deals for Palantir and boost its sales along the way. So, in my view, it's risky move to remain short on Palantir for an extended period of time.\nFinal Thoughts\nIf bears truly had a legitimate argument against Palantir, they would have actively shorted the name in a bid to profit off of a potential price correction and we'd have seen a rapid rise in its short interest. But that did not happen and Palantir's short interest dropped significantly instead. This suggests that market participants perceive the stock to be fairly or undervalued, and that the stock may have limited downside potential from the current levels. So, I would recommend Palantir's long-side investors to ignore the fear, uncertainty and doubt, and remain long on the name. Its intensifying sales push and reduced customer resistance with flexible payment plans, are likely going to drive its overall growth going forward. Good Luck!","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir: Rally On</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir: Rally On\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-18 15:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4414020-palantir-rally-on>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nPalantir's short interest declined by almost 27% in the last cycle.\nThe stock seems to be forming a bottom, before it starts rallying again.\nInvestors should avoid the fear, uncertainty and ...\n\n<a href=\"https://seekingalpha.com/article/4414020-palantir-rally-on\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4414020-palantir-rally-on","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1140777123","content_text":"Summary\n\nPalantir's short interest declined by almost 27% in the last cycle.\nThe stock seems to be forming a bottom, before it starts rallying again.\nInvestors should avoid the fear, uncertainty and doubt, and remain invested in the name.\n\nPalantir's (PLTR) shares are down 40% in value over the past two months and investment forums are rife with debates on the longevity of this price correction. Some bears are forecasting its shares to fall by another 50% in the near future but the reality may not be so bleak. Latest data actually reveals that short interest in the stock dropped by 26.7% in the last reporting cycle. This suggests that the stock is in the process of forming a bottom and it may not depreciate much, which should come across as an encouraging news for long-side Palantir investors. Let's take a closer look at it all.\nSource: Palantir website\nThe dropping short interest\nFor the uninitiated, short interest is essentially the aggregate number of short positions that are open and yet to be covered. A sharp rise in the metric indicates that market participants have stacked up short positions in a particular stock, in order to profit from a potential price correction. Conversely, a sharp drop in the metric suggests that market participants have wound up their short positions as they perceive the stock to be fairly or undervalued, with limited downside potential. So, altogether, short interest helps us in gauging the Street's ever-evolving sentiment relating to any given stock.\nAs far as Palantir is concerned, its short interest dropped by a massive 26.7% sequentially and stood at 56.43 million at the end of the last cycle. For the record, the last short interest cycle spanned from mid-February to February-end and the data was disseminated only afew daysago. To put things in perspective, the company has about 1.75 billion shares outstanding which means that a mere 3% of its entire share total stood shorted.\nSource: WSJ\nThis is a miniscule amount of shorting activity. I say this because companies that are surrounded by bearish narratives and have uncertain future prospects, generally attract speculative short-side bets in far greater numbers. I personally view short interest to be considerably high if it amounts to 20% or more of a company's total shares outstanding. But Palantir seems to be thinly shorted by this benchmark. For all we know, its ~3% short interest figure could be comprised of hedging-related bets with the sole purpose of minimizing volatility risk.\nI looked at other software stocks to get a different perspective but to no avail. Out of the 47 stocks in my study, 55% saw their short interest increase while 45% of the stocks registered a decline in their short interest. This more or less even split suggests that market participants wound up their short positions in Palantir largely because of their assessment of the stock and its underlying future prospects, rather than this short covering being driven by industry trends. Besides, shorting activity in Palantir was below industry average, thereby corroborating my view that it's a thinly shorted stock.\nData from individual quote pages on wsj.com\nThis begs the question - why aren't market participants shorting Palantir in the first place?\nCautious for good reason\nFor starters, Palantir's shares corrected by about 45% within February itself as a knee-jerk reaction to its Q4 results. This provided large gains for short-side market participants in a short time span, prompting them to unwind their positions and book healthy profits. So, that's one of the reasons why Palantir's short interest declined in the last cycle.\nData by YCharts\nBesides, with this correction, Palantir's shares are now trading at relatively modest valuation multiples. Per YCharts, its price-to-sales multiple has dropped from a steep 40x in January to a much more reasonable 29.4x at the time of this writing, and the metric is quite close to its 52-week low of around 24x. This suggests that the stock is close to its rock-bottom prices and it might have limited downside potential going forward. So, short-side market participants may be best served by booking profits in Palantir and reallocating their capital in other, more lucrative, trade setups.\nAlso, I explained in my previous article that Palantir is transitioning to a recurring payment model. The company used to charge its customers in advance for multi-year agreements, but it's now going to bill customers on recurring intervals, like a software-as-a-service model but with some contract cancellation clauses. We won't be covering the same points again in this article but the crux of it is that this move is likely going to boost Palantir's commercial revenues. This growth prospect makes it a risky move to short Palantir's shares for the time being, at least.\nAlso, Palantir, historically, hasn't been too focused on its sales effort. Its 10K reads:\n\n …our headcount has grown from 313 full-time employees as of December 31, 2010 to 2,439 full-time employees as of December 31, 2020…\n Our sales force remains relatively small, at about 3% of our total headcount.\n\nI thinkit's needless to say but having an understaffed sales team is bound to limit new order and sales growth. There just wouldn't be enough sales personnel to aggressively chase and convert leads.\nBut Palantir's management seems to be now laser-focused on remedying this oversight by significantly ramping up their sales team. They disclosed last month that the company is gaining access to IBM's 2,500 sellers, which is dramatically up from the current 30 sellers. Its management also noted in their Q4 earnings call that they \"expect to add triple digit head count to our sales function this year\".\nThis heightened focus on revamping the sales function, and their transition to a more customer friendly payment model, is likely going to generate new deals for Palantir and boost its sales along the way. So, in my view, it's risky move to remain short on Palantir for an extended period of time.\nFinal Thoughts\nIf bears truly had a legitimate argument against Palantir, they would have actively shorted the name in a bid to profit off of a potential price correction and we'd have seen a rapid rise in its short interest. But that did not happen and Palantir's short interest dropped significantly instead. This suggests that market participants perceive the stock to be fairly or undervalued, and that the stock may have limited downside potential from the current levels. So, I would recommend Palantir's long-side investors to ignore the fear, uncertainty and doubt, and remain long on the name. Its intensifying sales push and reduced customer resistance with flexible payment plans, are likely going to drive its overall growth going forward. Good Luck!","news_type":1},"isVote":1,"tweetType":1,"viewCount":299,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}