Jim Cramer on Palantir: “On Rule of 40 Yardstick it’s Ridiculously Cheap”

Palantir Technologies Inc. (NASDAQ:PLTR) is one of the stocks Jim Cramer put under the spotlight. During the episode, Cramer noted that the company’s CEO “keeps delivering.” He said:

“Palantir’s revenue growth accelerated to 48% and its adjusted operating margin stands at 46%. That’s an extraordinary combination that yields the score of 94, that’s on the Rule of 40 test. I follow a huge number of stocks. I don’t know a single other one even remotely near that terrific number. Palantir may be incredibly ridiculous on earnings per share, but on Rule of 40 yardstick, it’s ridiculously cheap. I’m not kidding. Mind you, Palantir’s exalted status is not based on small numbers. They had a billion dollars in revenue this quarter. Two years ago, they did $2.2 billion in revenue over the course of the entire year. What makes Palantir so elusive? First is the seemingly bombastic claims of CEO, Alex Karp. He says that because his company is hyper-efficient, he expects to get 10 times the revenue that the company has with 3,600 employees. They now have 4,100 employees. People hear that and they say that’s absurd. But I’m willing to give Karp the benefit of the doubt because he keeps delivering…

He sounds like a paranoid maniac, but… he’s a sane speaker. The bluster has scared professional money managers away from the stock, even as it delights the amateurs who beat the stock up endlessly both before and after the market. I’ve been behind it the whole way… We’re already well on our way. How did I know this? Because of the Rule of 40 valuation method, and it truly does work. Palantir might be able to keep working its magic for years… But if the stock’s going to keep climbing, the bears need to keep betting against it. Those are the people who don’t understand Palantir’s greatness. They’re the ones whose backs this remarkable run is built upon. Once all the bears become bulls, that’s when you run out of upside. Fortunately, that hasn’t nearly happened yet.”

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Palantir (NASDAQ:PLTR) develops software platforms like Gotham, Foundry, Apollo, and its AI Platform to help users analyze complex data, support operational decision-making, and integrate AI across large-scale organizational systems.

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Disclosure: None. This article is originally published at Insider Monkey.