Analysis on PLTR

If you believe in PLTR's technology, I don't know why you don't want to own this stock at these levels now. This article will focus more on numbers rather than technology (I do think it is better, but I will leave it for another article).

When analyzing PLTR based on GAAP metrics, the numbers are good, but not outstanding. You have to delete two things to really understand their core business, 1) Q3-20 should be adjusted, because the cost incurred when the company goes public is much higher than the normal cost, and 2) the impact of stock-based compensation is eliminated. When you do this, the company’s numbers are actually much stronger than those under normal GAAP metrics. From here on, the graphs labeled "Actual" refer to the actual amounts reported, and "Adjusted" refer to those indicators minus the impact of stock-based compensation.

Revenue/Cost of Goods Sold/Gross Profit: As shown in the chart, revenue grew very well from the previous quarter, only seeing exaggerated cost of goods sold in Q3-20 (when the company goes public-this will be a common theme).

When you remove the Stock comp from the portfolio (as clearly outlined in their 10-K btw), you can see that COGS is more in line with its historical trend (see below). You can also see the improvement in gross margin and company size (very positive).

In addition, PLTR expanded revenue from commercial customers (21.5% year-on-year) and government customers (76.6% year-on-year), bringing the revenue share from business to government to 44.2% and 55.8%, respectively.

Operating expenses: When you look at operating expenses, you will find that the expenses in the 3-20 quarters have surged because the company incurs additional costs due to the listing, but when you remove these costs, the core business is more attractive. (see below)

When you remove inventory compensation from the portfolio, we see a more consistent operating expenditure trend:

It is worth noting that the increase in revenue and the relative stability of operating expenses have had a very strong impact on profitability. Just think of operating expenses as a percentage of revenue (see below). Revenue growth significantly exceeds the cost of core business:

Putting all of this together, you can see how PLTR's core business looks strong and just surpassed the peak of non-GAAP break-even:

Overall, this company is profitable on a non-GAAP basis and has a significant discount from previous highs. Of course, rising interest rates and concerns about inflation are factors that need to be considered, but the company's financial situation is good and provides a good buying opportunity at this level. If I have spare money, I will buy into this weakness.

It's nice to hear other people's thoughts.