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A bet against Nvidia is smart. A bet against Palantir is not. Palantir has become deeply integrated into the surveillance states of America, and won't be going

by AzzyHN 11mo ago

A bet against Nvidia is smart. A bet against Palantir is not. Palantir has become deeply integrated into the surveillance states of America, and won't be going anywhere anytime soon.

giraffe_lady 11mo ago
Welll.... I'm old enough to remember it being impossible to imagine a world without the USSR in it.
- actionfromafar 11mo ago
  Putin still can't imagine it.
ProjectArcturis 11mo ago
Does that mean it should trade at a 600 P/E?
impossiblefork 11mo ago
But it has an unreasonable P/E ratio. The price is simply wrong. It doesn't matter if it's the best firm ever and will get its dividends forever. You still calculate reasonably. People say this kind of thing about Tesla as well, and Tesla has been stuck as a slightly-smaller-than-Mercedes-Benz sized firm for years and will stay like that forever, or even shrink relative to MB. NVIDIA has a much more reasonable P/E ratio, even though it is of course very high.
- zahlman 11mo ago
  Given that the market has moved so strongly away from dividends in favour of stock buybacks and other reinvestment (i.e. the successful companies are now much more often "growth" companies rather than "value" companies), and given e.g. Buffett's wisdom about total return, I don't know that traditional rules of thumb about P/E make sense any more.
  - impossiblefork 11mo ago
    In the end the value is just discounted dividends or there's an arbitrage opportunity under the risk neutral measure. This isn't a matter of rules of thumb. This is what's required to have prices that do not create an arbitrage opportunity.
nr378 11mo ago
Palantir is trading at 80x revenue (NTM), whereas Nvidia is only trading at 19x revenue (NTM). Both companies are growing revenue at a similar rate (~50% YoY), and Nvidia has a higher net margin, however Palantir's share price is up 717% over 18 months, whereas Nvidia is only up 124%. It's hard to argue Palantir's valuation reflects its fundamentals, even if you believe Palantir will be benefit from lucrative government contracts for years to come. Buying companies at 80x revenue has not historically been a great way to make money, unless they're growing revenue at several hundred percent per year.

by AzzyHN 11mo ago

A bet against Nvidia is smart. A bet against Palantir is not. Palantir has become deeply integrated into the surveillance states of America, and won't be going anywhere anytime soon.

giraffe_lady 11mo ago

Welll.... I'm old enough to remember it being impossible to imagine a world without the USSR in it.

actionfromafar 11mo ago
Putin still can't imagine it.

ProjectArcturis 11mo ago

Does that mean it should trade at a 600 P/E?

impossiblefork 11mo ago

But it has an unreasonable P/E ratio. The price is simply wrong. It doesn't matter if it's the best firm ever and will get its dividends forever. You still calculate reasonably. People say this kind of thing about Tesla as well, and Tesla has been stuck as a slightly-smaller-than-Mercedes-Benz sized firm for years and will stay like that forever, or even shrink relative to MB. NVIDIA has a much more reasonable P/E ratio, even though it is of course very high.

zahlman 11mo ago
Given that the market has moved so strongly away from dividends in favour of stock buybacks and other reinvestment (i.e. the successful companies are now much more often "growth" companies rather than "value" companies), and given e.g. Buffett's wisdom about total return, I don't know that traditional rules of thumb about P/E make sense any more.
- impossiblefork 11mo ago
  In the end the value is just discounted dividends or there's an arbitrage opportunity under the risk neutral measure. This isn't a matter of rules of thumb. This is what's required to have prices that do not create an arbitrage opportunity.

nr378 11mo ago

Palantir is trading at 80x revenue (NTM), whereas Nvidia is only trading at 19x revenue (NTM). Both companies are growing revenue at a similar rate (~50% YoY), and Nvidia has a higher net margin, however Palantir's share price is up 717% over 18 months, whereas Nvidia is only up 124%. It's hard to argue Palantir's valuation reflects its fundamentals, even if you believe Palantir will be benefit from lucrative government contracts for years to come. Buying companies at 80x revenue has not historically been a great way to make money, unless they're growing revenue at several hundred percent per year.