Most Investors Are Buying Palantir Wrong — Here’s What … — Transcript

Darren Steves explains why Palantir's stock dropped despite 85% revenue growth and shares his live trading strategy.

Key Takeaways

Palantir’s stock drop after strong earnings is due to market expectations and profit-taking, not business weakness.
Investors should avoid panic selling or blindly buying without valuation analysis.
Palantir’s government and commercial AI platforms create a sticky, recurring revenue business with strong growth.
A strategic options trade can capture upside while generating income during price pullbacks.
Understanding market psychology and valuation is key to investing in high-growth tech stocks like Palantir.

Summary

Palantir reported 85% year-over-year revenue growth with strong US commercial and government revenue increases.
Despite great earnings and raised guidance, Palantir's stock dropped due to market pricing in perfection and profit-taking by institutions.
The video explains the 'sell the news' phenomenon and why retail investors often buy as professionals sell.
Two common investor mistakes are panic selling after the drop and blindly chasing the stock without valuation context.
Palantir's government contracts are deeply embedded and mission-critical, creating a strong competitive moat.
The commercial AI platform is driving rapid growth and recurring revenue with high customer retention.
Darren shares his live trade on Palantir using a put credit spread and LEAPS options strategy to generate income and capture upside.
The video reviews Palantir’s strong fundamentals, high margins, and analyst price targets suggesting significant upside.
Valuation remains high, so timing and strategy are crucial for investing in Palantir.
The video encourages viewers to join a free Discord community for daily trade insights and Q&A.

Chapters

Full Transcript — Download SRT & Markdown

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Everyone is talking about Palantir right now, and most people are getting it completely wrong. Now, here's what is actually happening with Palantir. They just reported 85% year-over-year revenue growth, and the stock dropped, and investors are losing their minds trying

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to figure out why. Some are panic selling, some are rage buying, and almost none of them are asking the right question. The right question isn't why did Palantir drop after great earnings?

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The right question is, is the drop a trap, or is it an unbelievable opportunity?

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In this video, I'm breaking down Palantir and the numbers that they actually reported, why the company stock actually sold off, and what Wall Street and the market is pricing in, and I'll show you exactly how I'm playing Palantir going forward in the months

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ahead, and I'll show you the live trade that I've got on on the trading platform. Because buying a misunderstood company at the right time can build tremendous wealth.

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All right, let's start with the facts because I want you to hear these numbers clearly.

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Palantir reported 85% year-over-year revenue growth. US commercial revenue grew 133% year-over-year, and US government revenue grew 84% year-over-year. The company raised its full-year guidance as well. They added new customers at a record pace, and the rule of 40 score,

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which measures the combination of revenue growth and profitability, came in above 100, which is incredible. For context, most enterprise software companies are thrilled to hit a rule of 40 score anywhere above 40, but Palantir, they more than tripled that.

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Now, if a company reports 85% year-over-year revenue growth, raises guidance, and nearly triples its rule of 40 benchmark, why did the stock drop?

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The answer tells you everything that you need to know about how stock markets actually work because sometimes they just don't make sense.

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One thing I ask, smash that like button for me down below. It really helps to get the video out to more people, so I appreciate it very much. You're certainly welcome to subscribe as well.

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We're at an all-time high for subscribers, and check out the pinned comment down below. There's a link to the free Discord. It's free now, free for life if you get that in now. It won't always be. There'll be a monthly

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charge coming up, so now is the time to get in. You can see all the trades that I put on each and every day and the adjustments that I make. I answer questions as well, and we've got a great

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like-minded community where we all make money together. Here's what many investors and traders, they don't really understand. The market prices in what is expected, and not what just happened. Now, Palantir went into earnings with one of the highest

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valuation multiples in the entire market. Investors had already priced in perfection. So, when Palantir delivered incredible numbers, the question the market asked was, is this enough to justify the price we've already paid, and should we pay more and have it go

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higher? Well, for some institutional investors, the answer was no. This is called sell the news, and the trade was already crowded. Everyone who wanted in was already in, and when everyone is already in, there's no one left to push

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the price higher. So, institutions went ahead and took profits, momentum traders exited, and retail investors who just heard 85% revenue growth on the news rushed in to buy, right as the professionals were selling. Wow, doesn't that always happen? Now, this is the classic Wall

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Street setup, and it happens on great companies all the time. It happened with Nvidia, Tesla, Meta, and it's going to keep happening for many years ahead.

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Here are the two mistakes that I see happening right now. Mistake number one, panic selling. Some investors see the drop and assume something is wrong with the business. Nothing is wrong with Palantir. 85% revenue growth is not a

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company that's in trouble by any means. Now, selling a great company because of short-term price action is one of the most expensive decisions that investors can make. Now, mistake number two, chasing a stock blindly. The other group sees 85% growth on the headline and buys

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immediately. No context, no valuation work, no plan. This is also dangerous because Palantir, even after the pullback, still trades at one of the highest price-to-sales multiples in the market. Buying a great company at a bad price is always a bad investment, and

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the move isn't panic selling, it could be viewed as blind chasing. So, we want to understand exactly where we are in the market, and I'll break that down on the platform when I show you the live trade. All right, let's review what

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Palantir does, and then we'll talk about the valuation of Palantir, and then I'll show you on the platform my live trade and what I've got on and how I'm playing it. So, most investors think of Palantir as a data

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analytics company. That framing undersells this business and what it's really becoming. The government of Palantir is deeply embedded in US defense and intelligence infrastructure.

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Their Gotham platform is used across military and government agencies for mission-critical operations. This is not a contract you cancel. This is infrastructure. The commercial division, AIP, the artificial intelligence platform, is the real growth story right now. AIP allows enterprise companies to

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deploy AI on top of their own data securely at scale inside their own infrastructure. This is a massive differentiator in a world where every company is trying to build AI capabilities, and it's why US commercial revenue is growing at 71%

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per year. The competitive moat that Palantir has, well, it doesn't win customers on price.

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They win because their software becomes mission-critical within months of deployment. You don't rip out Palantir once you're running your operations, either. It's super sticky business, and they've got recurring revenue quarter over quarter, month after month, and the money just keeps coming in. So,

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that's the moat that Palantir has, and that's recurring revenue is the business underneath the stock price.

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All right, guys. Here we are on the tastytrade trading platform, my favorite for trading stocks and options. There's a link down below. If you go through my link, there's some benefits. So, check it out. If you deposit at least $2,000,

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which you really kind of need to place a few different trades at least, then that helps me out as well. So, thank you very much, and let's jump right into it. I'll show you right here. I've got a put

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credit spread on in Palantir. We've got Palantir. It's trading at 130 right now. It's pretty flat today. The market's open right now. And then I've got a LEAPS option at 135, 589 days out. So, I like to put it on like 2 years out. It

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replicates stock ownership, and then I sell a call against it and collect that monthly income on any pullbacks. So, best of both worlds. I get that appreciation on the move up, and then any move back, I get the collection of

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monthly income. So, it's a poor man's covered call that replicates a regular covered call, and that's the trade that I really like for Palantir right now.

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So, let's break it down. If we look on the chart here, I've got the 50-day in green and the 200 in red, and we've had that pullback. So, this is where I like Palantir long, and we're at the

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bottom end of the Bollinger Band as well. So, really like the setup here. If we look at the fundamentals, you can look on the platform here and financials and super strong. You can see the income statement, revenue, net income

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increasing and quarter over quarter, same and year over year, same with assets and liabilities. And they're a software company, so they've got huge 84% margins. So, to me, Palantir is like an ideal company. It's a must-have in my

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portfolio. Let's see what they have to say on Yahoo Finance. You can see right here, the 130 price.

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The analysts have a 183 price target for 12 months, so that's a significant up move from the 130. Now, if you

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into valuation. And again, I want to talk about valuation because that's where where people are having the problem right now with Palantir, but look where it's been. It's been up over 200, 212, 250, and it's because of the

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tremendous growth rate. Right now, it's at 88. So, to me, that's a deal. And if you look at the long-term stock chart, which I like to always look at what as well. Actually, let me show you where I'll do that. I'll pull it up

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right here. Let's take a look. I'll do this live right here. But look at um Palantir, PLTR. This is uh TradingView.

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And we can look um let's pull it out here. And I kind of look like to look at long-term trend lines. Um but Palantir hasn't, you know, been notable in uh long-term for quite a uh you know, for that long. But you can

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see if you look at the trend lines right here and look at where it is and with their growth story, you know, to me it's being down here at 130 uh and you can see the trends right there. It's it's a buy. The

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It's likely to to move back up in this range. So, uh my target is up around that uh you know, up here what, 240. Let's look at what my target is for Palantir uh right now.

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[clears throat] Um if we go back to right here on Yahoo Finance, the numbers. So, forward PE of 88. Pay attention to these numbers now, the income statement numbers. Revenue, trailing 12 months, 5.22 billion because I'm going to plug these into my numbers

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calculator and I'll show you where I expect the stock to be in 1 year, 2 year, and 3 years from now. But 5.22 billion in trailing 12-month revenue.

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Net income, 2.28. And then implied shares outstanding, 2.4 billion. So, you plug those into this calculator. 5.22, 2.28 on the current net income, 2.4 billion shares outstanding. I've got a forward PE at a 35% growth rate uh in revenue and 45% in

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net income, and that's conservative. Um with a 180 PE, that puts the stock price at 247 a year from now. And what is it trading at today? It's trading at 130. So, that's almost a stock double. In year

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two, 359 and uh year three, 521. So, tremendous buy for me right now. If you want this calculator, just comment down below and I can get it to you. Uh no problem. And uh what else did I want to show you? Uh

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let's go back to the platform. And then I'll show you the trade that I would put on right now. Again, it's the trade I've got on the the poor man's covered call.

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So, I would go Here we go. Ta- table mode. I would go out to probably 589, almost 2 years. And then I would go in the money right here, 130 call. It's the 66 delta. I'd like to go above 66, 70.

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You can go to the 120 for 4570. That's a nice one, too. Boom. You click uh we're going to buy calls. Calls on the left, puts on the right. This call controls One option contract controls 100 shares of stock. So,

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for $45.20, we control 100 shares. So, that's The cost of this is 4520 * 100. So, it's $4,520.

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But to buy 100 shares of stock outright, it would be $130 * 100, which is 13 grand. So, it's basically like a third uh a little bit more than a third the cost to control the same 100 shares. Now, what's nice is

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you can write monthly calls against it. So, I go 30 to 45 days out. And then I like the 145 strike right here, 28 deltas. So, that gives you a If you subtract that from one, that gives you a

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72% probability that we're going to stay under that 145. Um but you could sell that and collect $3.35. The minute you hit this, it subtracts it from the 4520. And you can do this every month, collect 300 bucks a

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month, and pay this off in like a year. And then you're controlling 100's uh shares of stock for free. So, really like the poor man's covered call.

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From here you hit review and send and place the trade. Remember to like and subscribe down below if you haven't already. Join the free discord in the pin comment down below. It's free for life if you get in now. There will be a

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monthly service service charge coming up. So, be sure and get in now while it's free. You can see all the trades that I put on each and every day and the adjustments that I make. We've got a great like-minded community where we all

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make money together. Simply enter your email address. I send you a link. Takes less than a minute and we go from there.

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Thanks for watching. Be sure and watch this next one and have a great day.

Topics:Palantirstock analysisrevenue growthearnings reportinvesting strategyoptions tradingput credit spreadLEAPS optionsAI platformWall Street

Frequently Asked Questions

Why did Palantir's stock price drop despite strong earnings?

The stock dropped because the market had already priced in perfection, leading institutional investors to take profits after the earnings report, a phenomenon known as 'sell the news.'

What are the two main mistakes investors make with Palantir stock?

Investors either panic sell after the stock drops, assuming business trouble, or blindly chase the stock after hearing strong growth numbers without considering valuation or having a plan.

What trading strategy does Darren Steves use for Palantir?

He uses a put credit spread with LEAPS options, buying long-term calls and selling monthly calls to generate income while capturing potential upside, replicating a covered call strategy.

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