Big data analytics company Palantir (NYSE:PLTR) is a government favorite and was considered highly attractive based on the number of contracts it was receiving. Many investors thought that PLTR stock could soar to new heights after its initial public offering in 2020; however, they were wrong.
PLTR stock started its stock market journey on a high note and hit $35 in January 2021, but has been on a downward trend since then.
The company hasn’t been able to hit $30 per share since reaching that point and has been trading below $20 for the past six months. Currently, PLTR stock is exchanging hands for $8.95, much lower than what many investors expected.
I still think Palantir has massive potential and its contracts are proof of the solid products it offers. However, the frustration with Palantir stock is only growing. With that in mind, let’s dig deeper into why I think you should consider PLTR as a great long-term play.
| Ticker | Company | Recent Price |
| PLTR | Palantir | $8.95 |
Palantir’s Business Is Growing
Palantir has been in the news recently for the contracts it was awarded. The company received a $36 million army prototype contract from the Army for the development and integration of its TITAN program. Further, Guidehouse, the third-largest consultancy to the federal government, announced an alliance with the company for Palantir’s “Foundry software platform to help clients outwit complexity.” It also received a contract from the U.S. Space Systems Command for $121.5 million.
These are just a few contracts Palantir was awarded recently, despite the looming recession. It shows the potential of the company to generate revenue regardless of the market conditions. It also proves the strength of its products. Skeptics have criticized the company for relying heavily on government contracts, but it has made strong moves in the commercial segment as well.
Palantir’s Q1 Results Weren’t That Bad
Investors weren’t happy with Palantir’s Q1 results, but if you take a closer look at the numbers, they weren’t that bad. In the first quarter, the company reported $446 million in revenue, which is a 31% rise year-over-year.
Furthermore, Palantir added 37 new customers in the quarter. This is a major trend that is going unnoticed by investors. The company’s revenue growth rate from the commercial client is consistently rising, while the revenue from the government sector is declining. In the recent quarter, the commercial revenue growth rate was 54%, while the government revenue growth rate stood at 16%.
It continues to expect annual revenue growth of 30% or more through 2025. If it manages to achieve this, its revenue numbers could be significantly high. Palantir might not be showing profit today, but the long-term picture is attractive and promising in every way.
Bottom Line on PLTR Stock
Recession-fearing investors might be running away from PLTR stock, but now is the time to buy it and hold for the long term. The company is in the growth stage and it has its eyes on long-term growth. This is one company that is not working for the next quarter or the next two quarters, but it has a clear plan for the next five years.
It has healthy revenue growth and solid future prospects. The next quarter’s results might appear lumpy, but do not think of PLTR stock as a one-quarter play. It is trading at a reasonable valuation today and if the company achieves 30% growth by the next few years, it will be a great bargain.
On the date of publication, Vandita Jadeja 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.