Transcription
The hottest stock in the stock market, Palanteer, is coming out with Q1 earnings today at the end of the day. And everybody's wondering the same thing: Buy, sell, or hold Palanteer shares ahead of earnings?
I'm going to cover everything you need to know so you'll be prepared for today 100%. We're not going to leave anything out. Every single thing is going to be covered today. Stay with me. Don't click anything. Don't smash anything. Don't buy anything.
Now, of course, if you are an academy member, you have seen this slide, and you know exactly what I'm about to say right now because we've covered this slide yesterday in a weekly academy lesson. This is the investing iceberg, folks. What everybody's focused on is this: the tip, the price. Everybody's obsessing about the price of this stock. Oh my god, Palanteer is up to 125. Palanteer is down to 80. Nobody's talking about the real stuff that's actually driving the share price in the long term. The iceberg, the fundamentals, the growth, the management, the balance sheet, the business model, the margins, the cash flow—all of these things are going to drive the share price over the next 5 years. This obsession/fixation about the price of the share in the short term is sickness. You need to leave it behind. And that's exactly what we'll do in today's video. We're not going to be talking about the price that much. We'll focus on the important stuff—the stuff that will make you money over the next five years. And this earnings report is super important. Let me show you what I mean.
Now, in today's earnings report, what we're going to do is we're obviously going to talk about Palanteer's business. Right? A lot of folks still, right now in 2025, ask me the same question: "Tom, what does Palanteer do?" It's easy to understand what Tesla does. They make cars. It's easy to understand what Google does. It's easier to understand what Amazon does. What in the world does Palanteer do? Question I still get in 2025 somehow.
Now, to make a long story short, Palanteer basically does one thing: They take your data as a big client. They take that data, they put it into one place, and then they basically allow for a unified dashboard for everybody in the organization to have access to all this data, and this data becomes actionable. You actually make decisions based on that data. I'm going to give you an example. Assume that you're running an airline, and that airline has a fleet of planes. It has warehouses. It has scheduling. It has suppliers. It has a lot of stuff, a lot of data. Every single flight generates 2 million data points. All of this data gets pulled up into one dashboard. That dashboard uses, in the case of AIP, an LLM or some sort of an AI, and actually drives decision-making stuff like preventative maintenance. The plane is in the air, but because on the ground we already have indication that a certain malfunction is about to happen, we will prepare already in advance the parts. So, while the plane is being offboarded, offloaded by passengers, we're already fixing the malfunction so the plane doesn't waste a single second on the ground. A grounded airplane is worth a lot of money. That's just one example. This is how you turn data into dollars. That's exactly what Palanteer does. And as you'll see in a second, they do it very, very well.
Now, this is not a pitch for Palanteer. I'm just explaining to you what they actually do. If you take a look at the price of Palanteer as far as the share price, and I know I said we're not going to focus on the price, we're not. But I got to show you the journey here. This is where we all started. We all first met in 2020 when I made my first Palanteer video right here when the stock was $10, the direct public offering. Then the stock basically flew out of the stratosphere into the $34 region. Everybody told me I'm a genius. I got all this love, and then the stock drops to $7 just two years later, and then everybody bails. Panic ensues. Everybody says that the stock is worthless. The stock-based compensation, they're not profitable, they don't know what they're doing, etc., etc., etc. At this point, people are bailing on the stock. Now, we have done the absolute opposite. We've been buying the heaviest here, but that's a story for a different video. Then all of a sudden, just six months later, the stock's at $15—from 7 to 15. Quite remarkable. That's a 100% increase in the share price in 6 months, right? People at this point have been saying, "Well, Tom, the stock has already doubled. There's not a lot of room. You don't want to be buying a stock into a parabolic spike, do you?" Well, again, that's why we don't time the market. That's why we don't predict. We prepare. Now, we kept on buying. The stock went to $30. At this point, people told me, "Well, Tom, the stock has already 4xed from this price right here, you know, in just two years. I mean, there's no way it's going to do it again, right?" Well, we just kept on buying. We don't try to predict. We kept on buying. The stock goes to $80 in December of 2024. At this point, I basically say, "Hey, this is absolutely insane, but we'll take it. We'll just continue to dollar cost average. If we see an opportunity to double down, well, maybe in the future if the stock drops, we'll double down. But for now, we'll just keep this." At this point, the stock goes to $120 in February of 2025. At this point, I make a video and I say, "Hey, this is a good time to trim 10, 20, 30% of your position from a risk-management perspective and to continue dollar cost averaging." We'll talk about that in a second. Now, the stock drops to 80, or 70, sorry, to 70. Everybody says, "Tom, you're a genius. How did you know?" And I keep explaining to people, I didn't time it. I didn't know it's going to happen. It was a fluke. Doesn't matter. I was talking about risk management. If the stock would have gone up to 130, I would have still been right. It doesn't matter. It's not about what the share price does in the short term. And lo and behold, what happens just a month later, a month after this thing, after the 70 bucks per share, we are now at 125, even higher than we were. And now we are up 60% in the past 30 days. So, was I right? Was I wrong? The share price fluctuation in the short term is irrelevant. Who cares? It doesn't matter. We are about long-term investing.
Now, let's talk a little bit about the journey of Palanteer, which is not different than the journey of any other stock in the stock market. Now, assuming, of course, we're talking about a quality stock, a quality business, you know, not trash. If it's a good stock, it's still going to go through the same life cycle like any other stock in history. We're going to have hope, then optimism, then thrill, then the euphoria, "I am a genius" stage, which everybody's a genius at that point. Then the stock starts to drop. People initially are complacent, but then there's anxiety, then panic, and then we're back to hope again, starting a brand new cycle. Now, we've seen it with Palanteer in 2022. We've seen it with Palanteer in 2025. It's going to keep on happening. Now, the one thing I want to show you is how it actually looks in real life. In real life, there's a 45-degree slant because as these cycles keep happening, and you can see it with Palanteer—10 to 35 to 7 to 80 to 120 to 70 now to 125. These cycles, as they continue to happen, are in a 45-degree slant. The lows become higher, the highs become higher, and every time we go through cycle one, cycle two, cycle three, cycle four, the price keeps going up as long as the company is quality, right? There is no way to time this. So, all you can do as a long-term investor is buy all across these. Buy it here, buy here, buy it all across these points right here. And if you actually have a system in place like the one we teach in the academy, well, you're going to buy more when this green zone actually happens. And you're going to buy a little bit less when the red zone is happening. But essentially, you're going to be dollar cost averaging at all times. And when you can, in the green zone, you're going to be DCA x2, which is exactly what we've been doing since 2020 over the past 5 years. That is why in my academy, on my Discord, in our celebration room, there are hundreds of people with 200, 300, 400, 500% profits posted, showing what they've done over the past 5 years investing in the stock following the DCA system.
Now, let me show you something. Palanteer as a company confuses a lot of investors. So, we're going to demystify everything right now, and we're going to keep it simple. So, Palanteer, in case you don't know this, it's been around for a long time. It was founded 20 years ago. In fact, more than 20 years ago, right? They basically have four types of products: They have Gotham and Foundry, which basically take data and turn it into assets. They have the AIP, which integrates any LLM, any AI, absolutely agnostic, and actually uses this AI along with Foundry to give you operational decision-making on the fly. Things that used to take six weeks now take six minutes, and they're 10 times better. And then you have Apollo, which is the cloud delivery system. And all of these are basically managed by three people: Alex Karp, Peter Thiel, and Joe Lonsdale. These are the founders. And nobody will ever keep these guys out. In certain companies, you always have this fear that the founders might leave. There might be influences from outside. Corporate culture might go funky. But these guys are so smart, they put in Class F shares. So, they all hold Class F shares, which means that they have veto rights. If you've seen "Friends," veto—they have veto rights forever. Nobody can ever derail the Palanteer culture that got them so far from these guys, no matter what the percentages are. That's absolutely brilliant. I think any founder should do this.
Now, as far as the 2024 numbers that were coming off, absolutely phenomenal, right? Revenue in 2024: $2.86 billion, 34% on US revenue in general, and 29% on all revenues. That's the bottom-line growth or the revenues. Now, what I found interesting in all these numbers—you can see them on the whiteboard. I don't need to repeat them—but a lot of people kind of have short-term memory here. Now, these numbers are great. Revenues are 2.86. That's beautiful. But just three years ago, Palanteer had $1.5 billion of revenue. So, Palanteer in three years basically went from 1.5 to $3 billion in revenue. You know how hard it is to take a company from 1.5 to 3 billion revenue in just three years. Now, that is not even the most impressive part because if you look under the hood, because sometimes revenues can be empty calories, you know, they can be very flashy, but how's the profitability looking like? Because that's where the real story begins, because the profitability is actually a lot more impressive than we think, right? Palanteer generated $470 million of net income. We're not talking about gross margin. We're not talking about adjusted EBITDA. We're not talking about operating margin. Net income margin. That's dollars in the bank. $470 million of 2.86 billion. That is insane. That's a 16% net income margin. That is wild. Now, you'll see in a second why it's even crazier, but I'm going to let you hold on with that for a second. What's even more impressive is that Palanteer has such powerful clients; the top 20 clients, on average, of Palanteer are paying $65 million per year. That is insane. The average, by the way, was 20% lighter just a year before that. So, their top 20 clients are paying a lot of money for this stuff. And they increased by 20% over the past year, since 23 to 24. Now, the total remaining deal value for Palanteer, which is how much ammunition they kind of have in the clip, is 5.4 billion. So, Palanteer can literally do nothing for the next two years except carry on the contracts they already have and still maintain the same level of revenues they have today. They also have one of the most beautiful balance sheets I've ever seen in my life. And I don't usually get excited about balance sheets. I mean, who does? But we're talking about $5 billion of cash, zero debt, and a $1 billion buyback program that was already authorized.
Now, not everything is peachy about this company. There are risks. Of course, you have to acknowledge the risks, right? We have a huge key-man risk with Alex Karp. If he leaves, it's like Elon Musk leaving Tesla. It's a huge deal, right? We also have client concentration risk. I just showed you the top 20 clients are basically billing $50 billion, $60 billion per year per average. That is very, very dangerous to have so much money coming from so few clients. And of course, we have geographic concentration—mainly US and Western-oriented, not enough worldwide income. And that is by design. That's how Palanteer wants to run their business. But nevertheless, that is a risk: geo-concentration, client concentration, and key-man risk. But those are risks I can live with as a long-term investor.
Now, there's also the stock-based compensation (SBC) that people talk about all the time. People who don't like Palanteer, they talk about this as some sort of a problem. Now, Palanteer didn't really have salespeople up until a few years ago. They hired a brand new sales force about two years ago that basically inspired a huge SBC allocation, which artificially inflated the stock-based compensation of Palanteer, and that was temporary. There's also the fact that Palanteer is attracting top-tier talent, and when you attract top-tier talent, you got to pay, and people don't want just salaries, they want actual pieces of the pie. This is absolutely overblown and not an actual risk I want to address because, to me, this is absolutely BS.
Now, let's take a look at this slide right here. So, the expected results that are supposed to come out today are 36% revenue growth, $862 million of revenue, EPS of 13 cents, and guidance of 35% for the rest of the year. If Palanteer meets these marks, they will be on target. If they go under, they will miss on any of them, and if they go above, they will beat, and that's how the market is going to react. Now, does it mean automatically that if it beats, the stock flies? No. Sometimes the stock can beat, and it can fly up. Sometimes the stock can miss, and it can actually fly up. There's no rules to this. Tesla had really subpar earnings, but the stock flew up. If Palanteer is coming in hot to these earnings, sometimes even beating is not enough. We'll see; the market is going to do its thing. The market can stay irrational much, much longer than any of us can stay solvent.
Now, what to focus on, folks? Now, as far as the focus—sorry, as the focus part for me—are basically these four points. I'm going to be watching US commercial growth. The last figure we have is 65%. I want to see an increase in that. I'm going to watch the margins. If we can get better than 16% net margin, that would be great. The net dollar retention is 120%, which is insane. If they can keep it, that's great. If we can improve it, even better. The top 20 clients, I would like to see some increase in that $65 million per client. They do it every year. So, I expect them to do it again. And the total deal value, if they can increase that, beautiful. These are the things I'm watching.
Now, let's talk about the meat and potatoes: what to do, right? Look, folks, I don't have a DeLorean. Great Scott. If you know where that reference is from, comment below, right? I don't have a DeLorean. I don't have 1.1 gigawatts. I don't have a crystal ball. I don't know. Now, maybe what I'm about to tell you right now ends up being absolutely wrong. When you predict, these things tend to happen. I don't care. I don't care about the short-term, short-term price movement after this video. It's not what I'm talking about. I'm talking about the next five years. Now, I'm also not here to gamble or to trade around earnings. Like, this is absolute pure gambling. I don't care about that. I'm here to give you the long-term investing advice.
Now, what do I mean by that? Basically, number one, you have to get comfortable in chaos, right? Short-term chaos with a stock like Palanteer is going to be a thing. Just get comfortable with it, right? You also have to understand your own risk profile. If you are older, if you are younger, you have different risk profiles. If you're in your 70s, a heavy allocation to a stock like Palanteer brings more risk with it than probably a lot of people can live with. There's also liquidity risk. Maybe you want to buy a house in a year. There's also mental well-being. You also have to account for that. Palanteer is not a cult. It's not a religion. There's nothing wrong with being a grown-up.
Now, what do I mean about being a grown-up? Palanteer is flying in super hot to these earnings. Okay? Does it mean that it's going to go down? No. Does it mean it's going to go up? I don't know. Nobody knows. But what you have to do right now is basically, if you're sitting on big profits, if you are sitting on big profits, trim 10 to 30% of your position. That's the responsible thing to do. If you're up 200, 300, 400% on this stock, do not be greedy. Greed is bad. Trim a little bit. Keep 70% in the game and continue to deploy via dollar cost averaging, via fixed allocations non-stop. You actually take out a third, you derisk, and you continue to slowly add to your position. That's just a de-risking play. It has nothing to do with timing the market and has nothing to do with your conviction. It doesn't mean you're not bullish. And if the stock drops 20% below the 52-week high, you double down on your DCA. That's the whole thing you have to know here. It's simple as that. Trim if you're up big, continue to dollar cost average, wait for your opportunity, and ignore the short-term noise. As always, if you want to get better at this game and you want to tune out all this noise, join the academy: patreon.com/dommnash. Would love to have you there. We teach you all these things. This is exactly the sort of stuff we do in the academy. Would love to see you there. And as always, go Palanteer. I'll see you guys in the earnings.