Conviction Investment Series: Palantir Technologies (June 3, 2025)

A soft answer turns away wrath, But a harsh word stirs up anger.

Proverbs 15:1

Most of Proverbs was written by King Solomon. According to the Bible, King Solomon was the wisest man who ever lived, and his legacy is left to us through Proverbs, Ecclesiastes, and Song of Solomon. I identify well with this Proverb as far too many times I’ve stirred up anger rather than turned it away. Ironically, through reconciliation, I’ve learned how much more powerful a soft and patient answer can be.

This is a great segway to today’s investment topic. Investing can become highly emotional if left unchecked and with social media, discussions on investment positions can get divisive quickly. These types of emotionally charged encounters do nothing to improve how investment decisions are made. If anything, they are destructive and completely disconnected from how investors can succeed and execute under pressure.

Overview

I’m starting a series on Palantir Technologies, Inc. (PLTR) for two primary reasons. First, this company has clearly become a highly visible and popular investment option across institutional and retail investors. Second, for retail investors looking for the most optimal opportunities to initiate a position or accumulate more shares, I believe there is a prudent approach worth discussing.

I initially purchased PLTR during its Direct Listing. I accumulated my overall position with a cost basis of $9.24 per share. I held my position selling 12% in late 2024 and two additional tranches earlier this year entirely liquidating my position with an average overall sales price of $80, equating to a767% realized gain. Clearly, the company’s performance as of today is far greater than my realized gain. Had I simply held, my paper gain return would have stood at 1,341%.

I did take the 88% gains and initiated a position in Tesla, Inc. (TSLA) during the third week of April 2025 and liquidated the position recently for an additional 60% realized gain. Combined this equates to a sales price in PLTR of $120 per share, or a 1,200% return.

Investment Moves Context

I initially purchased PLTR because I recognized the opportunity for cash flow inflection that would be forthcoming as the company scaled. Clearly, the value of PLTR’s services grew based on top customers and new customers, but the core investment thesis for me was focused on cash flow inflection which would unlock investment returns.

Fast forward to today and clearly, cash flow has inflected, and the margin has achieved levels beyond my initial financial modeling assumptions. The problem for me is the glaring disconnect with any sense of valuation today. Valuation can be very subjective, and during times of froth, it’s always easy to disregard valuation to varying degrees. But PLTR has pushed the limit to the point of disregard.

With the full liquidation of PLTR, I was torn as the run-up thereafter was not anticipated. During this time, the volatility driven by tariff escalations increased and PLTR had its movements below the $80 level, but they were short-lived. It was at this point that I decided to place my PLTR gains into TSLA. I was not entirely expecting to hold TSLA long-term, but I was also weighing the potential for PLTR to remain frothy through the duration of 2025. It wasn’t until last week that it dawned on me that I could lock in my 60% TSLA gains to augment my PLTR sales price and reduce my need for a sub-$100 pullback.

Ironically, since liquidating the TSLA position, augmenting my PLTR sales price to $120, PLTR has rallied to an all-time high just north of $133. Based on PLTR’s current valuation level, the stock price is priced beyond perfection. For investors to achieve any sort of return near or above double digits, PLTR’s cash flow valuation needs to remain well above the 100 times multiple.

Investment Series Focus

This is the catalyst for this investment series. PLTR is overvalued and there is ample cash to redeploy into the company. The challenge is to execute during the right time, like the TSLA position. By no means am I interested in perfectly timing anything. If I can repurchase PLTR near the $105 level, a 21% drop, my average cost basis would improve to just above $8, or 14% better than the original level. If PLTR were to drop below the $100 level, then my improved cost basis would improve towards a 30% adjustment or a $7 cost basis.

For those scoffing that PLTR will see sub-$110, from February 18th to March 10th, PLTR dropped by nearly 40%. From March 24th to April 4th, PLTR dropped by nearly 25%. It is only a matter of time for the next big move down.

To summarize, this series is geared to those looking to initiate or accumulate positions with PLTR. It could be advantageous to those looking to short PLTR via puts as well. For those who are simply content to hold long-term, this should help inform dealing with volatility and depending on cost basis help mitigate future volatility.

There are a few things on my mind that can be helpful as topics moving forward for this series on PLTR:

• Deconstructing Valuation: Long-Term V. Momentum

• Financial Modeling: Getting Ahead Of Wallstreet & What It Means

• Uncertainties: What We Don’t Know & What It Means

• Bubbles: How Do They Start & Why Do They Burst

• Patience: An Investor’s Best Friend

Depending on how PLTR’s stock price continues to unfold, I’ll likely use and cycle these topics accordingly.