Palantir Technologies (PLTR)

By both methods, the value today (DCF $66 · Multiples $91) is below the market price ($209).

Today — expensive, no margin of safety: at $209 trades ~130.5% above its value discounted to today (~$91); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$56.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($209) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The price discounts growth (66.0%/year) above our base case (30.0%/year) → it is priced for a demanding scenario and leaves little cushion against a slowdown.

That growth implies ~$26.7 bn of owner earnings in year 5 (vs ~$7.9 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/Owner earnings (ex-SBC). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Palantir is valued on a single multiple over its owner earnings (an integrated software business). The metric is ex-SBC and with tax normalized to 20%: stock-based compensation (~13.6% of revenue, ~$836 million TTM) is a real economic cost that reported free cash flow adds back, and the ~1.4% GAAP effective tax rate (release of accumulated tax-loss carryforwards) is unsustainable, so normalized owner earnings run around $2,115 million against reported flow of ~$3,358 million. Rolling grid: year-0 is the real TTM as of Jun 30, 2026 (revenue $6.16bn, +79% year over year, built by levels from the Q2'26 8-K). Year 1 does not copy the guided year: guidance is calendar-based and the model window closes in Jun 2027, three months later, so it is built by levels — the third quarter of 2026 the company guides to ($2.16bn), the fourth by subtraction from the guided year ($8.150-8.158bn), and the first half of 2027 at each scenario's pace (+30% adverse, +47% base, +60% favorable over the same half of 2026). That leaves year 1 at $9.83bn (+59.7%) in the base case. From there the rate decays geometrically to 18% by year 5 — the ceiling of the band the method grants a hypergrowth business still penetrating its market — with no plateaus or steps: 59.7% → 44.3% → 32.8% → 24.3% → 18.0%. The GAAP operating margin is re-anchored to the real TTM (42.8%, versus 38.1% at the prior close), preserving the near-flat shape the path already had, so no margin expansion is stacked on top of the revenue increase. Capex and depreciation are re-anchored to their real ratio against revenue (0.7% and 0.45%), well below what the model previously carried. The multiple starts from an extraordinary level and compresses toward ~29x by year 5 — still above the software average — with the compression coming from the growth of owner earnings, which more than quadruple, not from cash accumulation. The net cash position holds at its current level (~$9.4 billion of cash and marketable securities, no debt); the verdict is not decided by the business — exceptional — but by the price paid.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $113 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $209, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $113 in 5 years and a required return of 4.5% annually, the maximum to pay today is $91. Against the current market price ($209), the margin of safety is -130.5% (trades above the maximum → a premium is paid) and the total return at that price would be -11.6% annually.

• Extreme multiple. 86× TTM sales and 249× owner earnings.
• Demanding reverse DCF. To make 10% over five years, one must believe revenue reaches ~$28bn plus a 45% margin plus an exit at ~30×. Even meeting all that, the return is ~0%.
• No margin of safety. The five-year base value (~$113) sits below the price ($209); for 10% one would need to enter near ~$49.
• Still expensive even five years out. With the price fixed and growth compounding, EV/sales goes from 86× to 19× by year 5 — still a premium, not cheap.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ High incremental ROIC (compounding)
• ✓ CFROIC backs up the ROIC (100%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• ROIC / capital-light. Capital-light (minimal capex), $8bn net cash → very high returns on capital.
• The SBC trap. FCF (~$2.7bn) adds back SBC ($730M, 14% of revenue) → clean owner earnings are ~$1.6bn. Value ex-SBC.
• The tax trap (NOLs). GAAP net income uses a ~1.3% tax rate (NOL release); normalizing to ~20% lowers owner earnings.
• Cash quality. FCF benefits from deferred-revenue float (collects up front) — healthy while it's growing, but inflates the metric.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Growth breaks down by segment: Government (defense and intelligence contracts) and Commercial. The chart's levels are from closed fiscal years (FY2024 and FY2025), which is the latest the company publishes by segment; the Q2'26 8-K adds that US commercial grew 149% year over year in the quarter and that its remaining deal value reached $6.24bn, +124%. The book of business is accelerating faster than recognized revenue.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real, accelerating growth. +79% TTM, accelerating to +93% in Q2'26; not an easy comp or FX — it is real AIP adoption.
• Where the engine comes from. US commercial (+133%) is the driver; Government (+53%) is the base. RDV +105% confirms the pipeline.
• Reinvestment runway. AIP widens the addressable market; account expansion (top-20 +55%) on top of new clients.
• Inevitable deceleration. Growing +85% isn't sustainable; the base case projects deceleration toward ~20%. Even so, the multiple requires it to last for years.

• Relevant in 10 years / recurrence. Data/AI software for government and enterprises is recurring and strategic; defense entrenchment provides durability. Yes.
• Differentiated product. The ontology plus AIP are differentiated; the main rival is the client's own in-house development (which tends to fail).
• Pricing power. High in entrenched accounts (switching costs); the ~50% adjusted operating margin evidences it.
• Operating leverage. Extraordinary: operating margin from 5% (2023) to 38% GAAP (TTM) while revenue doubles.
• Concentration / lumpiness. 54% of revenue is government (contracts cancelable for convenience); top-3 clients = 16%. A source of volatility.

• ✓Leverage (net debt / EBITDA)Net cash $9.4 bn
• –Interest coverage (EBIT / interest)no data
• ✓Liquidity (current ratio)7.23×
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 100% of ROIC
• ✓Value creation (ROIC − 10% bar)+35pp
• ✓Malinvestment test (capex vs incremental ROIC)Productive investment (1.5x)
• –Float / working capitalNeutral WC
• ✕Dilution (SBC % of revenue + shares)SBC 13.6% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Net cash strength. ~$8bn of cash plus investments, zero financial debt → trivially solid solvency.
• Liquidity. Current assets $9.55bn versus current liabilities $1.38bn (ratio ~6.9×). No short-term risk whatsoever.
• Generates cash. Strong, growing FCF; the business self-funds with ease (minimal capex).

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Exceptional execution. The founding team brought the business to a Rule of 40 of 145 with brutal margin expansion.
• Balance-sheet strength. ~$8bn net cash, zero debt; conservative capital allocation.
• Concentrated governance. Super-voting Class F → 49.999% control held by the founders; minority shareholders have no real check.
• Key-man risk (Karp). The 10-K acknowledges explicit dependence on the CEO; his departure would be hard to replace.

• The price (86× sales, 249× owner earnings) discounts that Palantir sustains the guidance it just raised and keeps growing at close to 45% annually on average for five years, to ~$28bn of revenue.
• And that the adjusted operating margin expands and holds at ~45-50%.
• And that, even so, the multiple 'only' compresses to ~30× owner earnings (still a premium), not down to the software average.
• Meeting all three, the five-year return from $209 is close to zero: the price already bakes in a scenario better than the bull case.

This isn't a cheap stock or a value opportunity: there are no missing buyers or motivated sellers — on the contrary, it's a retail favorite riding AI momentum. The business is exceptional (Rule of 40 = 145), but the price discounts perfection and then some. The perception-reality gap works against the buyer at this price.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -22%/year (-71% total): the margin of safety protects the downside. The bull (-5%/year, -24% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Extreme valuation. 86× sales / 249× owner earnings: the central risk is the price, not the business. Even a bull case yields ~0% over five years.
• Government concentration. 54% of revenue is government with contracts cancelable 'for convenience' plus budget cycles plus top-3 = 16%.
• SBC dilution. SBC ~14% of revenue; with the buyback ended (Jan-2026), dilution erodes per-share value.
• Momentum / retail. A retail favorite with meme-stock dynamics; perception can reverse violently.
• Key-man (Karp). Explicit dependence on the CEO acknowledged in the 10-K.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A wide moat and ROIC 45% above the 10% bar, but the price sits above value (no margin) → great business, expensive.

• Peter Lynch Growth at a reasonable price (GARP)

  A hyper-growth growing 30% at a multiple/growth of 8.3 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 0% (EBIT/EV) + ROIC 45% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts 66% vs our 30%: priced for perfection, no favorable mispricing.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -22%/yr over 5y (material loss) → risk of permanent capital loss.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, widening; sources: switching costs, intangibles, efficient scale, cost advantage → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  The price demands 66% growth, far above our 30% — heroic assumptions.