$Palantir Technologies Inc.(PLTR)$ 

Hi Friends,

I would like to share that we shouldn't purely rely on ROE or PE. 

Every metrics have their own flaws. PE has it, Forward PE has it, ROE has it as well. 

Nonetheless, that doesn't mean they are not useful. Rather, a combination of all these metrics & business fundamentals allow us to filter unnecessary noise. 

In PLTR's case, let's dive in a little deeper into it shall we? 

Personally, I hold pltr shares. High conviction.

Hence, I can sell covered calls while holding its shares. This decreases my cost basis. Basically you get paid to HOLD. We then add on pullbacks. 

Note: Add in tranches to conserve your dry powder. But of course you can also buy larger positions if you find the price attractive.

Also, we can always use cash secured put options to buy stocks at a lower cost. 

Repeat this process over and over again on stocks that have wide economic moats like Palantir, Google, Microsoft, Facebook etc. Even S&P ETF.

We don’t need to be geniuses or smart to make money in the stock market.

We simply need to ignore the noise and look at factual numbers and the fundamentals of a business.

Ignore anyone who tells you $PLTR is worth $40, $80 or $500. It doesn’t matter. Nobody can tell you exactly where a stock price is going.

Stock prices can exceed their fair value. They can also trade way below their fair value for extended periods of time.

For $Palantir Technologies Inc.(PLTR)$  

You need conviction. That’s all that matters.

The fundamentals of the business didn’t change. In fact, they got even stronger.

Q2 revenue grew 93% YoY to $1.94B. U.S. commercial revenue exploded 149% YoY, while U.S. government revenue grew 90%.

Palantir also generated $1.22B of adjusted free cash flow in a single quarter, representing a 63% margin.

HERE IS THE IMPORTANT PART THAT HAS BEEN OVERLOOKED:

PLTR has

4.99B in RPO (Remaining Performance Obligations)

$13.1B in RDV (Remaining Deal Value).

RPO represents revenue that is contractually committed but has not yet been recognized as revenue.

RDV is the broader measure of the remaining value of Palantir’s deals.

And these numbers are important because they give us visibility into the amount of business already sitting within Palantir’s contracted relationships and future deal value.

But here’s where it gets even more interesting.

Palantir generated $3.37B in TCV (Total Contract Value) in Q2 alone, including $2.13B in U.S. commercial TCV, which was up a staggering 153% YoY.

Think about that.

While people are arguing about whether PLTR is “too expensive” at today’s price, I’m looking at a company that is:

Growing revenue at 93%.

Growing U.S. commercial revenue at 149%.

Generating $1.22B of adjusted free cash flow in one quarter.

Signing $3.37B worth of contracts in one quarter.

And building an increasingly large pool of future business.

That’s the part that's has been overlooked.

Does that mean PLTR cannot fall?

Of course not.

Will the stock be volatile?

Absolutely.

Can PLTR become ridiculously overvalued?

100%.

Can it experience 20%, 30% or even larger pullbacks?

Very possible.

That’s exactly why you need conviction.

If the fundamentals deteriorate, change the thesis.

If the fundamentals remain strong while the stock pulls back because of sentiment, that’s when you pay attention.

Don’t fall in love with the stock.

Fall in love with the numbers.

Hold.

Sell OTM covered calls when appropriate.

Use the premium to lower your effective cost.

Add on meaningful pullbacks when the fundamentals remain intact.

Repeat.

You don’t need to predict the exact top.

You don’t need to predict the exact bottom.

You just need to own great businesses, understand what you own, and have enough conviction to not let market noise make your decisions for you.