Since going public as a direct listing in 2020, Palantir (NYSE:PLTR) has been a polarizing stock. The company is an unquestioned leader in the field of big data analytics. Bears say its close association with the United States government, along with an executive compensation structure that has caused share dilution, make PLTR stock overvalued. Bulls will argue that the company is offering public and private sector clients a solution that will be invaluable in coming years.  

The truth probably lies somewhere in between. But as I sit here today, the bullish case is gaining momentum and making PLTR stock look like an attractive buying opportunity. 

Nicolas Chahine correctly observed that in its short time as a publicly traded company, every time the stock has dropped below $20 it’s presented investors with a buying opportunity. If history repeats itself, then PLTR stock could set up as a profitable trade.  

What About Commercial Growth? 

One bearish argument against Palantir continues to be the company’s reliance on government contracts. These contracts accounted for approximately 56% of the company’s revenue in the third quarter. But this is a statistic that requires context.  

First, the company is growing its commercial revenue. In the last quarter, Palantir reported a 37% year-over-year (YOY) increase in commercial revenue. And the company’s overall revenue was up 36% YOY at $392 million. For the first three quarters of 2021, the company has revenue that exceeds $1.1 billion. 

Commercial revenue accounted for 44% of the total in Q3. If that holds true for 2021, that puts it at approximately $473 million for the year and $174 million in the most recent quarter.  

If Palantir was growing its government side of the business at the exclusion of its commercial side, it would be concerning. But it’s hard to find fault when the company is growing both sides of the business.  

Investing in Gold and Bitcoin 

In an effort to guard against black swan events, Palantir recently made a large purchase of gold bars. It also announced it would accept payment in Bitcoin (CCC:BTC-USD), although according to a company spokeswoman, Palantir has not received any payments in the cryptocurrency. 

Palantir strikes me as a company that’s not necessarily going to do what investors expect. And I can certainly understand if investors might wonder why the company chose to deploy capital in this way as opposed to buying back shares.  

Perhaps it would be easier for investors to accept Palantir’s dabbling in gold and bitcoin if it wasn’t for the continuing dilution of shares that is happening as management exercises warrants. It’s a perfectly legal practice, it’s just not something investors like to see. 

Of particular concern was the approximately 17.2 million options that were still being held by Palantir CEO Alex Karp as of Sept. 30. These options were set to expire on Dec. 3, 2021.

Not surprisingly, Karp has sold a lot of these options recently. But the good news is that Karp was by far the biggest holder of options. So while there will likely continue to be some selling in the next few years, investors may have to find something else to object to.  

What to Do With PLTR Stock 

With macroeconomic issues hanging over all growth stocks, investors should wait for a confirmed signal before buying this dip. As for me, I have to admit that PLTR stock is starting to look a lot more attractive at this price. An adjusted free cash flow (FCF) of $119 million in the last quarter and a margin of 30% is hard to ignore.  

In fact, based on the company’s FCF projections, InvestorPlace contributor Mark Hake has a price target of $38.81 for Palantir. And as Hake notes, even if investors have to wait two years for the stock to hit that target, they would still get an average annual return of 29.54%.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.