Palantir Technologies (NYSE:PLTR) is a growth stock. When growth stocks were in fashion, it was a winner. When they ceased to be in fashion, investors lost.

After writing about its data analysis products in July, I called Palantir stock a dirt-cheap speculation. In September, I looked at its high price and asked if investors wanted to keep playing.

Those who didn’t heed the warning have lost half their money. PLTR stock is failing. But it’s important to note that the company is not.

PLTR Stock By the Numbers

Palantir’s numbers have been growing steadily since 2018, when the company did $595 million in business. During 2020, it did $1.1 billion. Through the first three quarters of 2021 it has slightly exceeded that total.

Palantir is next due to report earnings Feb. 17, before the market opens. If it hits revenue estimates of $413 million, it will have 39% growth for the year. The most important number to look at will be earnings, which until now have failed to appear.

Analysts think this time Palantir will earn 4 cents per share. Of course, it was also supposed to make 4 cents per share in the third quarter. It wound up losing 5 cents per share.

Palantir was big among retail investors last year as a “story stock,” the story being co-founders Alex Karp and Peter Thiel. Karp is a big believer in the national security state. Thiel loves him some Trump and has helped fund a university around his politics.

From a business standpoint Palantir is showing solid progress. But with Palantir stock, you’re paying a lot to be in on it. Even after its recent fall, Palantir has a market cap of $26 billion. You’re paying 17 times revenue and over 5,000 times earnings, assuming those earnings appear.

Analysts have soured on the name, with half of the 8 at Tipranks now saying you should sell it.

The Key to Palantir’s Success

Palantir’s Gotham and Foundry are proprietary programs. They’re opaque to the user and can only be edited by Palantir employees.

Palantir has grown to its present size on the strength of government contracts. It is now seeking commercial contracts for Foundry, which is offered by subscription. To drive that business the company has funded several start-ups. These are in a variety of industries ranging from analyzing wind farms to blockchain.

Foodsmart may be typical. The company claims to integrate dietary assessments and nutrition counseling with online food ordering. It has partners in 48 states, which accept government support payments, meaning income may be no barrier to eating better.

If just a few of these start-ups turn out to be hits, Palantir investors will see big benefits. But you’re not buying a VC fund. You’re buying a data analysis company.

Bottom Line on PLTR Stock

Palantir is still a very expensive stock. But some stocks grow into a high valuation. Amazon (NASDAQ:AMZN), for example, fell hard from its $295 per share high in 1999, but it eventually came back.

I have no problems with the founders’ politics. My problem is with the proprietary software business model. It’s a model where all the benefits go to the business, but so do all the risks. The open source model, on the other hand, gives most benefits to its users, but costs are shared, and everyone benefits from the rising base.

Open source has trouble today because companies like Amazon haven’t provided it proper financial and technical support. People rightfully ask whether the commons can survive that attitude.

But proprietary platforms carry risks too. These include technical risks, since few people can find or fix bugs, and financial risks, since the platform only improves slowly. I see Palantir as still priced too high given those risks.

On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.