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):
| Year | FCF (in billions) | Present Value (in billions) |
|---|---|---|
| 2025 | $0.65 | $0.56 |
| 2026 | $0.80 | $0.59 |
| 2027 | $0.95 | $0.61 |
| 2028 | $1.10 | $0.63 |
| 2029 | $1.25 | $0.64 |
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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One Comment on “Palantir Technologies Inc. (PLTR): Our Calculation of Intrinsic Value”
this is to hilarious.
1. why would you assume 16% discount rate? That is crazy high, that is 10% above average annual returns, that is 5x more then average. Lets give it high discount rate of 10%
2. Terminal growth of 2% ? you think PLTR business is not good enough to beat inflation long term? That is riddicilous
3.FCF projections are just insane, it is insane because the FCF is made up. Why would PLTR make 1,25B in 2029, when it is making 1,5B annualized right now?
The company guidance is 2B in 2025 so why are you writing 0,6B?
4. Why would you expect the growth to slow from 100% per year to 20% next year? Seriously, why do you Palantir will not find any new customers?
FCF estimates
Year FCF (in billions) Present Value (in billions)
2025 $2 $1.81
2026 $3,6 $3
2027 $5,8 $4,36
2028 $8 $5,51
2029 $10 $6,25
Total Present Value of FCFs: $21 billion
(10 × 1.03) / (0.10 – 0.03) = $147 billion
$147 / (1.10^5) = $91 billion
Enterprise Value
= $21 + $91 = $112 billion
Net Cash
= $5.22 billion cash – $0.239 billion debt = $4.98 billion
Equity Value
= $112 + $4.98 = $117 billion
Shares Outstanding
= 2.418 billion
DCF Value per Share
= $12.35 / 2.338 = $48
Current Price
= $117
Margin of Safety
= (48– 117) / 117≈ -58,9%