Palantir Closes Above $28 For The First Time Since 2021..

Let's talk about what's happening.

Welcome back to Daily Palantir! On today’s newsletter, we’ll analyze Palantir closing above $28 for the first time since 2021 and discuss what it means for the stock. Let’s get into it!

Institutional Fomo

I believe there is a bit of institutional FOMO going on. Retail has always loved this company, but the last time we saw a run like this was post Q1 earnings. That run sent the stock to $23, we never saw below $20 again, and I think that run was obviously institutions getting in after realizing Palantir had completely changed. Although some of this run is retail driven FOMO, the +23% in the past month feels like some institutions seeking "enterprise AI use cases" and realizing Palantir may be the only company actually providing those.

This is partly why the stock may be surging, big money continues to buy every dip in the low $27s and high $26s, which makes Palantir develop a stronger base at those levels.

Wall Street missed Palantir’s rally when it was trading between $6 and $10, favoring other enterprise SaaS companies like Snowflake. Now, with Palantir up about 70% year-to-date and 182% since its DPO, institutions are scrambling to get in on the action. They are buying at much higher prices than early retail investors, who had the advantage of community-driven research and conviction.

Now, with the AI boom, institutions that missed out on Nvidia, AMD, Microsoft, and Google are now looking at Palantir as a key player in the AI software space. On several occasions, Palantir has been the only green SaaS name while others like Snowflake and Datadog were in the red. This indicates that the market sees something unique in Palantir’s potential, and institutions are likely buying in anticipation of this performance.

Macro Economics

The macroeconomic landscape is pointing to 2 rate cuts coming this year. Rate cuts decrease the cost of capital which is good for growth stocks like Palantir, so they get a premium. Today Jerome Powell sat through another 2 hours of pointless congressional hearings BUT the one thing he said that made sitting through those 2 hours worth it to me was, "Personally I feel the labor market is weakening."

JPow made it very clear that he is not speaking on behalf of the Fed, but he himself feels the labor market is weakening. Based on the Fed's dual mandate of maximum employment, he feels that loosening monetary policy, meaning rate cuts, would be appropriate to make sure unemployment doesn't rise so rapidly that the Fed is seen cutting rates as a REACTION to the labor market in the same way they reacted after inflation already had gotten out of control.

Jerome Powell does not want to make that same mistake. Labor market weakness plus a potentially cold CPI tomorrow showing that inflation is coming down plus the AI tailwind for software use cases that institutions are looking for leads to a strong macroeconomic and macrotechnological landscape that helps Palantir gain momentum and may be a reason for the stock going higher.

Palantir Specific Reasons

There’s several company-specific reasons and catalysts that have generated significant investor interest in Palantir. One of the major catalysts is the $480 million Project Maven contract with the U.S. government. This contract, which includes an initial $153 million guaranteed payment, showcases Palantir's critical role in providing advanced AI and data analytics solutions for national security. The fact that Palantir was the sole bidder for this contract highlights its unique capabilities and strong positioning within the defense sector.

Another key catalyst is Palantir’s strategic partnership with Oracle. Initially announced in April and solidified recently, this partnership integrates Palantir’s Foundry and AIP platforms with Oracle’s cloud infrastructure. This collaboration allows Palantir to leverage Oracle's extensive network of 300,000 enterprise clients, significantly expanding its potential market reach. The partnership underscores Palantir’s credibility and its ability to work with top-tier technology companies to offer comprehensive solutions for data management and AI applications.

Palantir's involvement in the commercial space sector has also been a driving factor. The company has secured multiple commercial space partnerships, including deals with Starlab and Voyager Space. These partnerships position Palantir as a key player in the growing space industry, providing advanced data analytics and AI solutions to support space exploration and commercialization. This diversification into new industries highlights Palantir's versatility and growth potential beyond its traditional government contracts.

The company has also seen notable success in the healthcare sector, with a recent $19 million contract from the youngest U.S. public health agency, ARPA-H. Additionally, a seven-year, $50 million extension with Tampa General Hospital and a five-year extension with Eaton, a manufacturing company, demonstrate Palantir's ability to secure long-term commercial contracts. These deals reflect Palantir's growing footprint in critical industries and its capability to deliver significant value through its data-driven solutions.

Finally, Palantir’s continued innovation and expansion efforts, such as hosting their fourth AIPCon and conducting over 1,300 boot camps worldwide, have contributed to its positive momentum. These initiatives help to drive adoption of Palantir’s AI and data analytics platforms, showcasing their capabilities to a broader audience and fostering long-term growth. Combined with a favorable macroeconomic environment, these company-specific catalysts have created a strong foundation for Palantir’s recent stock price surge and its potential future performance.

Earnings are going to determine everything for Palantir to justify this momentum, but there have been many catalysts in the past 3 months that have likely led the street to think of the company in a different way.

Where do things go from here…

So I am getting many messages and there's two types of messages: either people are sad they didn't buy more and are asking if they should chase or they want to sell and take profits.

THE SIMPLE ANSWER TO THESE QUESTIONS ARE BY ASKING YOURSELF ONE SIMPLE QUESTION:

What is your personal relationship with Palantir?

My personal relationship is holding on to the stock for the next decade.

I don't have that relationship with many other companies, but with Palantir, I do. Therefore, this is a very simple situation for me. If you have a relationship with the stock and a time horizon that is based on making a quick profit or wanting your paper profits, which could be upwards of 300% on the stock based on your average, to become real...then you have to have a completely different relationship with how you approaching holding the stock.

If you just don't care about holding over the next decade and feel $28 is too quick, too fast, it's overvalued, etc. then its a VERY easy sell. If you think Palantir is going to $50 end of year and want exposure AND ARE READY TO DCA IF YOU ARE WRONG and Palantir drops back to $21, then this becomes a very simple decision.

The easiest way for retail to lose is to not have a concrete relationship with their holdings. I was like this 5 years ago and every day I think I get better at defining how I want to hold onto specific positions that I have. Once you define that, you don't need to take on too much stress. If you've got an $8 average and want to see this play out to $100, then you hold.

The fun ride of going up and down is just that -- a ride. None of the profits are real, and if you are okay with that because you believe in the longer vision, then it's just a fun ride. If you have a $14 average and think $28 is a top and that you can get back in at $14, then you can make the choice to time this and sell. You might be right, you might be wrong, but at least you will be able to live with the decision because you constructed a relationship with the stock that makes it easier to know why you're holding and what you want to get out of holding Palantir.

I really hope this helps people that are concerned about the stock -- it's a fun ride to be on, Palantir has to deliver a strong earnings to justify the momentum, and if they do or don't, as long as you know what you will do (either DCA if it goes down or potentially sell if it surges or just keep holding) then you can be much more calm in your relationship with Palantir.

For the longs...first close since 2021 over $28...LFG.

That’s it for today - see you tomorrow!

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