Jim Cramer Discusses "Difficulty" In Palantir (PLTR)'s Valuation & Narrative

We recently published 10 Stocks Jim Cramer Discussed Including His Palantir Deep Dive. Palantir Technologies Inc. (NASDAQ:PLTR) is one of the stocks Jim Cramer recently discussed.

Palantir Technologies Inc. (NASDAQ:PLTR)’s third-quarter earnings saw the firm’s $0.21 in EPS and $1.18 billion in revenue beat analyst estimates of $0.17 and $1.09 billion. However, despite the solid set of results, the shares fell after the earnings report. Cramer spent quite a bit discussing Palantir Technologies Inc. (NASDAQ:PLTR) and shared that the pain point in the stock was whether its valuation matched its “incredible” and “profitable” growth:

“[On earnings and CEO short seller comments] Well look, it’s funny cause you read through the conference call and says well people come on CNBC and they say, they make fun of us. I mean, I’m on CNBC quite a bit and I’ve been liking the stock very much since 50. I thought it was an excellent quarter, I continue to think that they are doing things that other people are not doing and they are very special. I will say sometimes I like the Rule of 40 analysis. Look, the growth here is incredible and its profitable growth, and I really like that. I think the difficulty is you just say okay listen is it worth a half a trillion? And that’s the big issue. You take a look at the market cap, versus what you look at in terms of, then you look at price to sales for 2027, highest in the S&P and you say it’s really expensive. But then you say, this is an incredibly profitable, really well run company that is doing great things. That I think, and by the way, I have to tell you, their military stuff, Shyam Sankar, who’s probably I think the most, maybe the foremost thinker these days in the military, works at Palantir. And he’s excellent.

“Okay, so I just say, let them sell it. I’m not as concerned about the short sellers. Let people sell it. But it’s going to settle in, and they are doing amazing things. The companies that I dealt with when I was so concerned about them, that hire them, I haven’t found a company that hires them that doesn’t think they haven’t added tremendous value to them. So David, I’m stuck with like, yes market cap, I’m stuck with how to value on 2027 sales. But I am not stuck with this. They are a great company that does great things, both commercial and military. And I salute them, but saluting them doesn’t make money.

“[On why Karp would comment and care about short sellers] Well I don’t think he doesn’t need to. There are things said about him and the company that are, I would say, that he takes the overvalued complaint personally. And I think instead, it’s one of these things where you have to be a little like Henry Ford, which is say never complain, never explain. That that has a little more gravitas at this point. But they’ve been at it for 20 years, and there have been people who have attacked them the whole way.

“I do not speak to hedge funds, okay, I just don’t. Anyone who’s seen my phone logs would be able to tell you that. There have been so many hedge funds that have reached out to me to say listen, you’ve got to change your view on Palantir, this is a screaming short. And the usual you don’t know what you’re talking about, which I reserved for my father being able to say. My father passed many years ago, you don’t tell me I don’t know what I’m talking about, I’ve studied this Palantir a lot. The fact is that it’s an expensive stock but it may be the best run company in the world. So you have to struggle.

“Am I trying to develop a relationship with Alex? I have a relationship with my wife, with you guys, I kind of have a lot of relationships. . .But I happen to think the guys who do the defense here, are my idols for what they’re trying to do. Because they are trying to make it so that we are more lethal with fewer deaths. And that is what my father, who was a sergeant in the army for a long said, if we only had guys who felt like that.

“Look, what would I wanted to see if I were a long hoping the thing to go up, I would love to see that they just got a gigantic contract that we don’t know about. And they announce it. But it’s entirely possible that they couldn’t announce it. I guess what I am saying is, I am not backing away from my thinking that this is a great company. And there’s room for it. . . .this is the right one for the longs.

“He [Karp] does say something very important about the individual investor. And this is what I’m fixated on for my book, which is that, if you can find companies, that you like, with a fiery messianic CEO, I’m okay with that. . .I wish they had spent a little more time talking about, instead of saying listen, we are the warfighter company, which they are, here’s how we are doing things with warfighters that are different. But they could say, look Jim, that’s not our job, we don’t have to say that. But, if you’re gonna take that cause on, you can mention it. Remember, I am not criticizing Alex Karp, I would just augment it. I’m not. I can’t criticize the he has created a huge amount of wealth and I am in favor of that wealth creation. I am.”

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