Before telling you about this 10 billion dollar contract, I need to say I am very biased about Palantir. I am long Palantir and I have 600 Palantir stocks and am buying a little bit more every month. It is my highest conviction stock right now, and I feel it has not even reached a small portion of its potential.
A lot of reasons have been coming at the surface to believe that there is reasons to be bullish about Palantir. By now everyone knows that Ark invest has been buying up a ton of shares, making this one of Cathies highest conviction stocks. And it looks like that the entire investing world could start to agree with her.
But I am sure there is 100 million other sources about every single time Cathie is buying a stock and Cathies stocks have suffered a lot this year, so its not the best reference for a stock in this market. However there is plenty of other reasons to be excited about Palantir.
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Jim Cramer has been bashing pretty much every tech stock that Ark Invest has been buying. Well almost all of them. Jim Cramer recently said that he feels that Palantir is an okay stock to buy, given the current price and the way it presented itself at the last earnings.
Jim Cramer is the guy who has been bashing on Tech Stocks like there is no tomorrow. Especially the Woodstocks as he calls them. However from Palantir he says its an okay stock to buy given the earnings. That means something. If you are bullish on tech then Palantir is the stock that needs to be in your portfolio.
I don’t always agree with Jim Cramer, but he has a decent investment record, and has made a few excellent investment decisions. He has been recently in the news for selling off some Bitcoin for what now appears to have been an all time high. Perhaps Bitcoin will reach this level again, but nobody knows when. In my recent post I also talked about this and the possible Crypto Winter we might, or might not, get.
But lets not go into Crypto right now. Recently a bigger catalyst has cought my attention. Keep in mind this is about a contract that Palantir is competing with, and we are waiting for more confirmed sources until we can say this for certain. Spacenews writes the following about a new possible huge project coming to connect all of that unmined data that is currently being stored everywhere.
Palantir in April 2020 won a $10 million contract from SMC’s Space Enterprise Consortium to develop data-as-a-service tools. Palantir uses artificial intelligence to organize files, spreadsheets, emails, documents, images, videos and other data that is typically in disconnected stovepipes.
Palantir’s successful prototype led to the recent $32.5 million contract, Krolikowski said. Now SMC wants to start a larger effort with multiple providers that would compete for task orders, a contracting approach known as indefinite delivery indefinite quantity, or IDIQ. She noted that 16 companies competed for the consortium’s prototype contract a year ago.
“We imagine it could be well over a billion dollars for the IDIQ, and we’re really excited to be able to do that within the next year,” said Krolikowski.
The scope and contracting strategy for the IDIQ are still being worked out, she said. It will likely be over 10 years long, and it could be in the single-digit billions, or even as large as $10 billion, Krolikowski said.
Now when we look at Palantir’s revenue, I would expect it to hit around 1.6 billion or perhaps 1.8 billion max by the end of the year for 2021. So that mean’s that Palantir is competing for a contract that spread over 10 years could be bigger then 50% of their current revenue per year. That is insane. Now if you are a strong believer of the Palantir Technology then you know that even if they have over a dozen other companies competing, Palantir has by far the most chances to win this contract.
What is also on the Spacenews article is what Palantir is currently doing for them, and I quote:
Under Palantir’s contract for data as a service, for example, Space Force officials will be able to access a dashboard showing the location of satellites and other objects in orbit.
I actually have said this before. Palantir software sometimes reminds me of some of those real time strategy games like Red Alert. We did not realize it at the time but those Real Time Strategy games manage to put entire armies or even countries into a few screens easily accessible.
Those who have seen the Demo of Gotham know that this is exactly what Palantir is doing. It is delivering operating systems that are so intuitive and user friendly that it allows governments or companies to oversee everything they need in a single easy to use screen.
Also keep it mind these are government contracts. We know by now that the biggest catalyst for Palantir is the commercial sector. We can see Palantir is expanding big on large and medium sized companies. They hired 50 extra salespeople just for that.
There is a reason why Palantir stock has been going up against the downtrend of the market today. My bet is I am not the only one who is reading the news. Again I want to add a quote from Jim Cramer:
You can’t take a risk that your buying a stock that is going to go down big, and the way you find this are the ones that are in the green when the market is in free fall. Those are the ones that attract the most money.
Today the Dow Jones is down 0.19%, SP500 is down 0.35%. Palantir is up almost 2%. This is the stock you want to add to your portfolio. Don’t worry about inflation because Palantir is even cash flow positive, and already secured the loans they need. Hold this for 5 or even 10 years and watch the money come in.
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