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As part of our ongoing series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that is not currently in our screens, Palantir Technologies Inc. (PLTR).
 

Profile

Palantir is a software and data analytics company that builds platforms for large-scale data integration and decision-making. Its tools are used by government agencies and commercial clients, with growing traction in artificial intelligence-driven enterprise solutions. While known for its deep ties to defense and intelligence sectors, Palantir is also expanding rapidly in commercial verticals.
 

DCF Analysis

Inputs
Discount Rate: 16%
Terminal Growth Rate: 2%
WACC: 16%

Forecasted Free Cash Flows (in billions):

Total Present Value of FCFs: $3.03 billion

Terminal Value Calculation
Using the perpetuity growth formula:
(1.25 × 1.02) / (0.16 – 0.02) = $9.11 billion

Present Value of Terminal Value:
$9.11 / (1.16^5) = $4.34 billion

Enterprise Value
= $3.03 + $4.34 = $7.37 billion

Net Cash
= $5.22 billion cash – $0.239 billion debt = $4.98 billion

Equity Value
= $7.37 + $4.98 = $12.35 billion

Shares Outstanding
= 2.338 billion

DCF Value per Share
= $12.35 / 2.338 = $5.28

Current Price
= $110.00

Margin of Safety
= (5.28 – 110.00) / 110.00 ≈ -95.2%
 

Conclusion

Based on this DCF, Palantir’s estimated intrinsic value is $5.28 per share, significantly below the current price of $110.00. That implies a potential overvaluation of more than 95%. Unless the company delivers substantially higher growth than forecasted, or margins expand meaningfully, investors should be cautious at these levels.

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