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I don't own PLTR and wouldn't for ethical reasons (ICE, predictive policing, battlefield targeting). But the market dynamics are too interesting to ignore, so I built a full valuation model. Here's what I found.
**The business is legitimately strong:**
\- Revenue grew 56% in FY2025 to $4.475B
\- GAAP operating margin went from -27% (FY2021) to 31.6% (FY2025)
\- FCF of $2.1B on $34M CapEx (47% margin)
\- $7.2B cash, zero debt
\- US commercial grew 109%, deals >$10M hit 61 in Q4
**The price is the problem:** At $136/share, PLTR trades at 71x revenue, 215x trailing earnings, and roughly 300x owner earnings after normalizing for SBC and taxes. CrowdStrike has similar revenue and SBC profile and trades at 18x revenue. Datadog and Snowflake sit around 15x. The forward PE of 103x looks comparable to peers (Cloudflare 100x, SNOW 80x), but the PE comparison flatters PLTR because it hides three things: the 71x revenue multiple, the FDE-dependent delivery model, and a 1.4% effective tax rate that temporarily inflates earnings by a third.
**The "two companies" problem**: US Commercial grew 109%. International Commercial grew 2%. The 56% headline growth is an average of a hypergrowth US business and a flat international business. Karp said on the Q1 call: "Europe doesn't get AI yet." Europe's share of revenue fell from 16% to 10% in one year. At 71x revenue, you're paying for a global platform but getting a US-only company.
**SBC and dilution:** $684M in SBC (15% of revenue, down from 50% in FY2021). Diluted shares grew from 1.92B to 2.57B in four years (+33%). Management authorized a $1B buyback, executed $139M, then cancelled the program. At $136/share, that $139M retired about 1 million shares against 641 million new shares issued. To hold the share count flat at the current price, PLTR would need to buy back 114 million shares per year at $136 each. That's $15.5 billion, more than 3x total revenue.
**The CEO's jet:** Alex Karp's aircraft expense was $17.2M in FY2025, up 123% from $7.7M. Growing faster than international commercial revenue. Three founders control \~50% of voting power through Class F shares, which persists until the last founder dies.
**Valuation:**
\- DCF bear case: $11/share
\- DCF base case: $20/share
\- DCF bull case: $35/share
\- Probability-weighted: $21/share
\- Monte Carlo mean (10,000 sims): $21
\- Monte Carlo 90th percentile: $29
\- GAAP EV/EBITDA peer comp: $73/share
\- Forward non-GAAP EV/EBITDA comp: $162/share
\- Morningstar FV: $115
**- Simulations above $136: zero**
The Monte Carlo used a revenue CAGR ceiling of 45% (which implies $29B by FY2030, well above the bull case $21.9B). Even at the maximum of every input range simultaneously, fair value stayed below $60.
***TL;DR:*** The operating metrics are strong. The price requires sustained hypergrowth, massive margin expansion, and multiple assumptions with no historical precedent at this revenue scale. I think fair value is $15-30. Even the ethical concerns aside, the valuation math doesn't work.