To The Moon

Palantir Technologies, the data analytics juggernaut, has been on an astronomical ride, fuelled by lucrative government contracts and an aggressive push into the commercial sector. With its stock price soaring, investors are speculating: is a stock split on the horizon? More importantly, should you care? Let’s cut through the noise and explore what really matters for Palantir and your portfolio.

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The Stock Split Hype: A Psychological Game?

Stock splits are corporate manoeuvres where a company increases the number of outstanding shares while proportionally reducing the share price. It’s the financial equivalent of slicing a pizza into more pieces—same pizza, just smaller slices. Your ownership percentage remains unchanged, but suddenly, the stock appears more ‘affordable’ to retail investors.

Companies often split shares to increase liquidity and broaden investor appeal. Lower share prices can be enticing to smaller investors who might balk at a hefty price tag. Employee stock options also benefit, giving the illusion of greater ownership, even though the value remains the same. But beyond these surface-level advantages, do splits actually impact a company’s intrinsic worth? Not really.

Palantir’s Price Tag: Premium or Pricy?

Palantir’s stock has enjoyed a meteoric rise, trading at a premium with a price-to-sales ratio in the 8-10 range (as of late 2023). That’s well above the industry average, reflecting high growth expectations. The question is: can $Palantir Technologies Inc.(PLTR)$ live up to them?

The company’s valuation has skyrocketed, now exceeding $270 billion. Over the past two years, Palantir’s stock has surged from under $8 to over $115—a staggering 1,700% increase. In 2025 alone, the stock has already gained 55%, reinforcing its position as one of the most sought-after AI-driven software companies.

Technical trends shaping Palantir’s next big move

A stock split could make Palantir more accessible to retail investors, increasing liquidity and potentially drawing in new buyers. Employees, many of whom receive stock-based compensation, would likely welcome the move. But let’s be clear—a split does nothing to address the fundamental issue of valuation. Slicing a pricey stock into more pieces doesn’t make it a better investment.

The Real Issue: Can Palantir Justify Its Valuation?

Palantir’s dependence on government contracts has provided a steady revenue stream, but it also poses risks—budget cuts, policy shifts, and geopolitical changes can impact future deals. The real battleground is the commercial sector, where $Palantir Technologies Inc.(PLTR)$ is expanding but faces stiff competition from established enterprise software giants such as $Snowflake(SNOW)$, $C3.ai, Inc.(AI)$, and other cloud-based analytics providers.

The company has seen rapid commercial growth, with its customer base increasing by 15% quarter over quarter in 2024—the fastest pace of acquisitions to date. This expansion has driven a 31% surge in Q4 commercial revenue. However, government contracts remain crucial, accounting for 55% of Palantir’s total revenue. In Q4, government revenue surged by 40% year over year, outpacing commercial growth and reaffirming its importance to Palantir’s business model.

Despite this impressive growth, Palantir’s valuation remains stretched. The stock trades at an eye-watering 100 times sales and 618 times trailing earnings—multiples that require near-perfect execution to justify over the long term. Even under an optimistic scenario where revenue grows at 40% annually for five years, profit margins expand from 16% to 30%, and share count increases by 3% per year, Palantir’s 2029 earnings per share (EPS) would be $1.58. At current prices, that still translates to a lofty 74 times forward earnings—a valuation that leaves little margin for error.

Potential Risks Beyond Government Contracts

While government contract dependency is a significant concern, other risks loom large. Palantir's reliance on key personnel—particularly visionary leadership—could be a vulnerability if any major departures occur. Additionally, in an era of increasing regulatory scrutiny, data privacy and security concerns could pose challenges, especially as Palantir expands into more commercial and consumer-facing markets.

Will Palantir Split? And Should You Even Care?

Could Palantir announce a stock split? Absolutely. The company’s heavy use of stock-based compensation makes it a logical move. It would also follow the playbook of other high-growth tech firms that have split their shares to maintain momentum and broaden retail participation.

But let’s not get distracted. A split won’t change the fundamental investment thesis. The real test is whether Palantir can prove its long-term commercial viability, sustain profitability, and justify its premium valuation.

Where risk meets reward in Palantir’s evolving future

Alternative Scenarios: A More Conservative Outlook?

While the bullish case for $Palantir Technologies Inc.(PLTR)$ assumes sustained high growth, a more conservative scenario is worth considering. If revenue growth slows to 25% annually instead of 40%, and profit margins plateau at 20% rather than 30%, the company’s earnings power would be significantly reduced. Under this scenario, the stock’s valuation would appear even more stretched, potentially leading to a correction. Investors should weigh both optimistic and cautious perspectives before making decisions.

The Bottom Line: A Stock to Hold—For Now

At its current valuation, I’d rate Palantir as a hold. It’s an innovative company with a powerful product, but the price tag demands near-flawless execution in the commercial sector. A stock split might give it a short-term boost, but the long game depends on fundamentals.

While Palantir’s business is growing impressively, its stock price has likely outpaced its realistic long-term potential. At some point, valuations will need to realign with financial reality. Until then, patience might be the best strategy. After all, sometimes the smartest move in investing is simply… waiting.

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