Palantir Price Target as Analyst Touts $1 Trillion 'Golden Path'
After the news of a partnership with Nvidia, the AI darling has caught the attention of a notable Wall Street analyst.
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Here's a roundup of the latest news on some of our key small-cap holdings:
SoFi Technologies (SOFI)
After the closing bell on Thursday night, SoFi Technologies (SOFI) announced an underwritten secondary public offering of $1.5 billion in common stock. All of the shares are being sold by the company. SoFi intends to use the net proceeds for general corporate purposes, including enhancing capital position, increasing optionality, funding incremental growth and enabling further efficiency of capital management.
Ultimately, 54.5 million shares were priced at $27.50, which was at the low end of the $27.50 to $28.50 range. Goldman Sachs (GS) , which is CEO Anthony Noto's old stomping grounds, will act as sole book running manager. The offering is being conducted under the firm's automatic shelf registration that has been effective since July 29 of this year, so common sense tells us that we knew some equity dilution was bound to come this stock's way.
Am I rattled? No. While I agree that "general corporate purposes, enhancing capital position, increasing optionality, funding incremental growth and enabling further efficiency of capital management" amounts to nothing more than lip service, I look to Noto.
As far as I can tell, Noto, who is known to make frequent purchases of his own firm's shares, has not made any even remotely recent sales. In fact, just a month ago, Noto added to his stake through the conversion of a derivative (options) position. One officer in the firm sold stock at an average price of $26.43 on November 20 and another at an average price of $24.76 a day later. They clearly would not have made those sales at those prices if they knew something like this was in the works. As far as I can tell, Noto is long 11,247,900 shares and has taken no action to reduce that number. That's good enough for me.
By my math, this deal should dilute the equity by a rough 4.5%. The deal price is a 7.1% discount to Thursday's closing price. Though Friday morning's prices are still up by more than 100% from our net basis, I would have no problem initiating or adding to an existing long position at or below the deal price. I currently have a $36 target on SOFI.
Ondas Holdings (ONDS)
I missed adding an important news item in my Thursday piece on Ondas Holdings (ONDS) .
Readers should know that Ondas Holdings announced on Wednesday that the firm had been selected as the prime contractor for a major development and commercialization program for a major federal agency. Ondas expects to receive the actual initial purchase order in January to launch what will be a two-year, multi-phase program.
Under this program, Ondas will design, develop and integrate a drone-based autonomous border-protection system meant to operate across fixed and mobile environments. This will be a swarm-based program and only enhances the positive outlook that we have currently expressed concerning this name. I currently have an $11.70 target on ONDS.
Palantir Technologies (PLTR)
A team of Wedbush analysts led by Dan Ives released a new research report covering Palantir (PLTR) on Friday morning.
The report reads:
“When speaking more with prospective customers, majority discussed how they heard about Palantir’s technology and the value these technologies were able to provide through word of mouth after other partners went all in on Palantir, but many were shocked after seeing the use cases through demos giving us more confidence that many still don’t fully understand the full value that Karp & Co. bring to the table.”
The Ives team added:
“We note that the company is starting to see a roughly 50/50 split between new customers signing up for multi-year deals and existing customers looking to spend incrementally more on various products with many customers going all-in on the PLTR platform approach.”
Readers likely noticed the launch of the Chain Reaction platform earlier this week, which is a partnership between Palantir, Nvidia (NVDA) and CenterPoint Energy to help accelerate the build-out of AI from an infrastructure point of view.
On this, the Ives team wrote:
"With the company making strategic moves to remain at the forefront of AI and expanding its global presence, we believe that PLTR has a golden path to become a trillion-dollar market cap company over the coming years and will grow into its valuation as Karp and Co. remain one of the largest players in the AI Revolution.”
Ives rates PLTR at "Outperform," which is a buy-equivalent rating with a $230 target price. I currently have a $215 target on PLTR.
At the time of publication, Guilfoyle was long SOFI, ONDS, PLTR and NVDA equity.
