Avoidance Stance on Palantir Due to Excessive Valuation

3 months ago

Daniel Pronk

"Based on Palunteer's latest quarterly results, the stock is down 8% on the day, which I believe is due to the market pricing in far too much future growth. Even though their fundamentals are phenomenal, trading at 250 times free cash flow and with a free cash flow yield of only 0.4%, I am not buying into it because the risk-reward just isn't there. The valuation requires Palunteer to grow free cash flows at extraordinary rates just to break even with market returns, and that level of expectation is too risky for my investment strategy."

The speaker outlines his skepticism towards Palunteer despite its strong earnings. He argues that the stock's extremely high valuation and low free cash flow yield make the risk-reward unfavorable. As a result, he is choosing to avoid buying the stock given the heavy pricing on future growth.

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