Welcome Back to DailyPalantir! On today’s newsletter we will discuss Dan Ives raising his price target, short float updates, Shyam Sankar’s latest post, and more!
Dan Ives recently raised his price target to $35 on Palantir after they won the TITAN contract, here’s what he had to say:
I thought this price target upgrade made sense. We saw Marianna from Bank of America do the same by raising her price target to $28. Both analysts primarily did this off the backs of the TITAN contract being another catalyst for growth and helping to reaccelerate the government business.
Now, why does Palantir need to reaccelerate the government business?
Well…
Palantir government revenue:
Q4 2020 - $189M
Q1 2021 - $208M
Q2 2021 - $232M
Q3 2021 - $218M
Q4 2021 - $239M
Q1 2022 - $242M
Q2 2022 - $263M
Q3 2022 - $274M
Q4 2022 - $293M
Q1 2023 - $289M
Q2 2023 - $302M
Q3 2023 - $308M
Q4 2023 - $324M
The trend is positive and going up, however, the rate of growth has significantly dropped off. Palantir’s government business is 43% of revenue. The TITAN contract added 89M in top line revenue in 2024 alone, with an understanding that this was just one of many contracts coming within the overall JADC2 plan the DoD has.
As a result, this is a company that can get massive government deals at any point in time — and it seems like Wedbush and Bank of America understand this, which is why their price targets reflect a valuation that is based on increased government growth.
Hobbits Post of The Day
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I’m going to be doing a hobbits post of the day that focuses on a question and using that to go into a broader point — today’s question was about Project Brown Heron, which goes along with the government increased revenue we have been speaking about.
Now, the reason I’m bringing up Project Brown Heron is because it has to do with electromagnetic warfare.
Palantir recently just got an award worth $9.8M for this exact reason:
Palantir USG Wins $9.8M DISA Contract for Joint Electromagnetic Spectrum
Ops Tool Development Palantir Technologies, through its subsidiary Palantir USG, has clinched a significant contract from the Defense Information Systems Agency (DISA), marking a pivotal step in enhancing the United States' defense capabilities in electromagnetic spectrum operations. Awarded a $9.8 million Other Transaction Authority (OTA) contract, Palantir USG is set to develop an advanced Electromagnetic Battle Management - Joint Decision Support (EMBM-J DS) prototype. This initiative aims to provide U.S. forces with a cutting-edge planning tool, ensuring electromagnetic spectrum superiority across all warfighting domains.
Strategic Importance of EMBM-J DS The EMBM-J DS prototype is not just another defense tool; it represents a crucial advancement in the U.S. military's ability to plan and operate within the electromagnetic spectrum. This domain, essential for communication, navigation, and sensing across the globe, is becoming increasingly contested. Betsy Park, the EMBM-J Program Manager, emphasized the prototype's critical role in achieving electromagnetic spectrum (EMS) superiority, highlighting its potential impact on the U.S.'s strategic military capabilities. By integrating with existing service-provided EMBM tools and processes, the prototype aims to enhance interoperability among combatant commands, Joint Task Force JEMSOCs, and their counterparts at the component level.
Electromagnetic warfare is a domain of combat that involves the use of the electromagnetic spectrum (EMS) to sense, protect, and communicate. It can also involve offensive measures like jamming enemy radar or communications.
Project Brown Heron is a project the DoD started years ago which incorporates DaaS (data as a service) and part of those services are Electromagnetic warfare domains in the attempt to jam enemy radar and communication.
Palantir is involved in some really, really high-level work. The extension of this contract for $9.8M is a small dollar amount but just goes to show the continuous reliance the government has on Palantir to enable these services to become real, which is why they ended up winning the TITAN contract last week.
New Short Float
The shorts continue to cover when it comes to Palantir stock. For the past few months, we have reduced the short float from close to 9% to just above 5%.
I believe the main reason for this is because it is very, very scary to short a company like Palantir right now that is in the AI space, has low institutional exposure relative to other AI names, and is also executing against their core objectives. We are seeing under 100M shares shorted on a company with 2.1B shares outstanding — if anyone wanted to short Palantir, it’s not like there’s a shortage of shares willing to borrow. The shorts are scared, which is a great thing for those who are long in the stock.
Shyam Tweet
Shyam Sankar has been saying that the government needs to spend more on software for 2 years now. He recently published a piece in the Washington Post and continues to argue for the DoD to up its spend before other countries do. Palantir becoming the first software prime by winning the TITAN contract was a very, very big deal and speaks to Shyam’s argument about how software will be the key differentiating MOAT between the US and other countries.
As Shyam and Karp continue to argue for America to invest more in it’s software companies, and then get deals like TITAN as a result of their public lobbying, we actually may see the entire paradigm shift of how the government procures software to truly focus on giving companies like Palantir the resources they need to execute at a strong level, likely leading to the reason Bank of America and Wedbush upgraded Palantir.
New Karp Picture, New Karp Meme
That’s it for today — thank you for reading and I’ll see you tomorrow in your inbox!
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