Palantir Technologies Inc.'s (NYSE:PLTR) Path To Profitability

We feel now is a pretty good time to analyse Palantir Technologies Inc.'s (NYSE:PLTR) business as it appears the company may be on the cusp of a considerable accomplishment. Palantir Technologies Inc. builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. On 31 December 2021, the US$22b market-cap company posted a loss of US$520m for its most recent financial year. Many investors are wondering about the rate at which Palantir Technologies will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Palantir Technologies

Consensus from 11 of the American Software analysts is that Palantir Technologies is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$52m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Palantir Technologies' growth isn’t the focus of this broad overview, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Palantir Technologies currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Palantir Technologies which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Palantir Technologies, take a look at Palantir Technologies' company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is Palantir Technologies worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Palantir Technologies is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Palantir Technologies’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.