Okay folks, so the tier of the Palin reported earnings today, but before we even get into the earnings report, it's worth going over exactly why we even bother spending time talking about this company. My opinion is that what you have in Palantir is a company that's willing to lose money first in order to grab all the customers, corner the market with the best product, and then once they've killed off their competition with loss leading and they've grabbed the majority of all the customers and woven their way so far into the backbone of each of their customers' businesses, then they'll go and hike prices substantially, and customers big mega corporations will have to decide if they want to go and completely rework their entire business to switch to a different platform which will likely be very inferior to Palantirs, or stick with Palantir and pay the increased costs. In my view, what Palantir is doing right now is building itself as an indispensable, irreplaceable entity that is going to have so much power to provide value to customers, but also so much power to charge those customers whatever they want. Palantir in my view, is creating an entire industry just for itself and is designing it in a way to only have room for one player.

and that is itself. And that's just my opinion on the diabolical plan behind Palantir. Does that guarantee that Palantir will be successful? Absolutely not. In fact, bold actions can result in bold consequences if you fail.

But I think that you look at what Palantir has done thus far. You look at the speed, the pace at which they're acquiring customers, the extremely high retention and scaling in of customers, and the way that capital is managed and allocated throughout the company, and it paints the picture that Palantir is well on their way to this vision. And with Palinder, let's be real: you're getting a completely different type of company and that's not for everybody. You spend just 10 minutes going through what this company's about and how it presents itself, and you could tell it's cut from a completely different cloth.

It's like an intricate puzzle where there's a lot more than meets the eye and it's really difficult to put your fingers on it. But once you really start grasping it, it becomes incredibly compelling. and it's in many different aspects of this company. You look back at Ceo Alex Carp presenting a previous year's numbers in the middle of a forest, and quite frankly, it's eerily different from anything else you'd see in any other company's earnings reports.

I'll play it for a second welcome pound. You had a very strong year last year, and um, then, because of the strength a year, it might be worth taking a second and asking. Well, what do the numbers actually mean obviously on the face of them, Uh, they're strong, and even curiously, strong institutions. Countries, Individuals that can assess the value of software that can work Now are the institutions that survive and provide value, both in the government, commercial, and even moral context survive and provide value Survive They've also taken it upon themselves to shore up a ton of cash at the same time that they have no real debts and they have very, very healthy cash flow.

Most growth companies indebt themselves to the hilt and throw cash at literally anything possible, hoping something sticks and hoping they get some growth. And it's clear with this company, you're simply getting a lot more depth and long-term thinking with their strategy. And plain and simple, that's why I do like Palantir. It's not the only company that I like, but it is one of my top companies.

This is a company that bothers a lot of people because it's really out there with its thinking. But in my view, you have to be out there if you want a disruptive company. And really, when we're looking at growth stocks, that's what we're looking for. Disruption.

And to some people, that's a huge negative. Because disruption means volatility, It means negativity from analysts who only look at things from how much money is this company shooting out to shareholders, or how much money is this company not investing, the less it's investing in itself, the better, right? But so far with Palantir, if you agree with my overall speculation and opinion on what the diabolical plan is, today's report basically confirms that they are making progress on it. So anyways, pragmatically, what did Palantir report today? Well, Palantir reported better than expected revenue growth in the Fourth quarter and offered guidance that beat Wall Street's estimates. You've got year over year growth from Fourth Quarter at 34 and for full year 2021 at 41.

They're also continuing their guidance on expecting 30 annual revenue growth or greater through 2025, which is a key metric for how we valued Palantir and the bull case scenario of our price target videos that we did last year. But in a video that we did back on January 19th of this year, we talked about how Palantir is a company that analysts love to dismiss as a clown company because guess what? Instead of declaring massive profits, they're going and reinvesting that in trying to get more and more clients and leading with losses and also investing in their R D to build out a better platform and become more competitive in the future. And those issues have continued to be prevalent in the latest earnings report, but at the same time still have the good parts of Palantir, which are revenue growth projections. In January, I expected they'd report 40 for fiscal 2021., today, they slightly beat that at 41, and they reiterated that long-run guidance at 30, but in terms of expense side, this quarter they invested more money in sales and marketing aka customer acquisition as compared to the same quarter last year, but they also were able to cut spending in R D and general administrative.

In terms of results, you've got 71 year-over-year customer growth, and in the segment that we've been tracking most closely as Palantir's primary growth driver, their commercial non-government sector, you've seen a 200 increase. You look at this as a trend. Q1 of 2021, it was up 19, then 28, then 37, and then 47. The Ceo made a point of noting that their U.s commercial revenue doubled for the second time in 2021.

so it doubled in 2020, and then it doubled again in 2021. Or, as analysts like to say, it's growing very, very slowly. And disappointingly, in terms of the historical backbone of Palantir government revenue, that's up 47. it's actually down a little bit in terms of a trend.

We'll talk a bit more about that later. But overall, if you're looking at this report in totality, it's very difficult to say that Palantir isn't successfully scaling its operations. It's very difficult to say that Palantir is taking any sort of step back. In fact, they're rolling forward very very quickly.

So what went wrong then? why did the stock drop? Well, at least half the drop is probably because of the massive risk off day we had today. Usually if the Nasdaq is down a percent, pltr will go down three percent. Today the Nasdaq was down about three percent. So probably at least half of this, if not more was due to just the overall risk off trading.

But it did tank almost immediately upon earnings, and there were some genuine line items for analysts to be upset about. Obviously, Paluter chose to invest a lot in customer acquisition, which upset analysts. Alex Carp did say that future net income is in sight, so that's a positive, but if you're looking for real reasons to be disappointed, outside of just this being a growth company, the government sector momentum has consistently slowed down. this time a bit more than I expected.

But I mean, government cannot and will not be Palantir's future. That's a very limited market to serve and grow in. The growth in that category simply has a ceiling. It's been a very strong backbone for Palantir over the course of Palantir's operations, and Palantir would have never gotten here if it wasn't for the government side.

But the future of Palantir isn't commercial. The future growth of Palantir is almost 100 commercial, and the commercial segment, especially U.s commercial, has been a mind-blowing success. The other line item that some folks may have been genuinely mad about is that for guidance for Q1 of 2022, Palantir is forecasting an adjusted operating margin of 23, of which will pick up to 27 for full year 2022, whereas in 2021 they had an operating margin of 31. So that is a genuine setback on that front.

And the reason that the Co gave for dropping operating margin was that it was due to more employees returning to the offices and substantially increased corporate travel. All things that will be expensive for Palantir and thus reduce that operating margin. I would think that getting back into the office and increased corporate travel should serve to increase the productivity of palmentier, their sales, and their overall development. Otherwise, why would they do it? But I guess only time will tell.

But again, that's a line item that people are a little bit worried about. Maybe there's something else going on there that we don't completely see. It's hard to say, but overall, I think if you look at this report in totality, the fundamentals of Palantir have gotten better year over year, and 2021 was an excellent year, and it's set up to continually do substantially well into 2022 and beyond. But still.

the analogy that I'd make with Palantirs: you're essentially getting a house that's in the process of being built. Analysts can yell and scream about construction costs, construction delays, missing pieces, and many people would say I don't want to invest in a construction site anymore. I'll just sell my shares of the construction site before the building is even built. But at the end of the day, construction takes time.

If you're going to buy a construction lot, don't think that you're buying a completed house. If you want to buy a completed house, then you shouldn't be investing in growth stocks, right? And I don't mean that in the mean way. if you're going to buy a growth company, you have to be able to not just find growing companies before they've actually matured into fully built structures, but you have to project the markets that they're going into, the leadership and their track records, their ability to actually manage cash properly, and their ability to reach customers and provide them with extra value that the rest of the market isn't providing. And if you can do that properly more times than not over a long enough time horizon, you should get a huge extra alpha on the rest of the market.

But if you're wrong, obviously you're going to have the opposite result. The entire process is very analytically and emotionally draining, and it's not for everybody, but it is also where some of the biggest rewards are. Because the biggest companies that you've seen pop out of nowhere in the last 20 years were once a company that was hated by analysts because they weren't value stocks, yet, because they weren't mature companies, they were garbage clown companies until they reported profits and sometimes substantial profits, and they started rewarding dividends once companies have given up on investing all their money for future growth, then all of a sudden they're mature companies and Wall Street likes them. Unfortunately, by that point, the vast majority of the equity appreciation has already happened.

So there's pros and cons. Just like there are pros and cons of buying a construction site while it's in construction with Valentine, a lot of the market can't see it right now. You're just looking at a construction site. You see wood, You see unlivable spaces.

But with some luck and some time, you may be surprised at what ends up getting built here.