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What's in a name? Well, in J.R.R. Tolkien's world, a Palantir (a crystal ball) was used to watch over Middle Earth and it could be used to see what was taking place in the past, future, and present. In our real world, Palantir is a software company that could be said to do the same. From counter-terrorism tools to artificial intelligence platforms to partnering with the National Health Service to track and contain Covid-19, Palantir provides the means to watch over the world.
And if a small investor such as yourself can benefit from the stock’s rise while the company uses its big data analytics to help the world figure out how to be safe, then everyone wins.
How Palantir is helping during the pandemic may not be the only reason that you may have heard about the company recently. Its stock price hit highs in February, about six months after its initial public offering.
Step 1: Finding a broker that offers Palantir stock
Online brokers are one way to buy specific stocks, especially for beginning investors who want to learn as they go and do it themselves. Here are three great online platforms.
Stash is an investment app that sells thousands of stocks and ETFs, or exchange-traded funds, with $1 or less.
Stash has three types of accounts, each with a flat fee:
Beginner: Fee of $1 per month for a personal investment account.
Growth: $3 per month, adds on retirement account access.
Stash+: $9 per month. Everything from the above plans, plus investment account for two children, among other things.
The monthly fee is worthwhile if your investment account at Stash is at $5,000 or less. Any more than that and the flat fee could be higher than competitors who charge a percentage fee on your earnings.
No opening deposit is required to open an account. You’ll need to deposit money if you want to buy stocks, of course. Stash offers a little incentive to start investing. If you deposit $5, Stash matches it and gives you $5 to invest.
Fractional shares can be bought on Stash. Funds are pooled with other Stash members to make high-priced, higher-earning stocks more affordable by receiving a fraction of a stock and a fractional percentage on the returns.
Pros and cons
Low monthly fees, starting at $1
Fractional shares of stocks sold
No minimum deposit to open an account
Deposit $5 and Stash matches it
Not a robo-advisor, so Stash won’t direct you to stocks to purchase
Focuses on investment goals, not the purchase of individual stocks
Flat fee may end up being higher than competitors if you have more than $5,000 invested
Robinhood is an online broker where you can buy Palantir Technologies (NYSE ticker: PLTR). It’s a free trading platform that can be used as an app on Apple iOS or Android phones or anywhere else online.
Signing up is easy. Linking your bank account to Robinhood gets you some free stock from the company.
A minimum deposit isn’t needed to open an account. Even with only a few dollars to invest with, you can invest through Robinhood. Signing up for its Instant or Cash accounts doesn’t require a monthly fee either, so your investment costs can be $0.
The Robinhood Cash account allows zero-commission trades, but it doesn’t include instant deposits or instant settlements. For $5 per month, users can upgrade to a Robinhood Gold account, which provides margin investing where you borrow money from Robinhood to buy stocks. At least $2,000 must be deposited into the account to trade on margin.
Robinhood also has these three fees:
Regulatory transaction fee that’s ultimately paid to the Securities and Exchange Commission, or SEC. The fee is $22.10 per $1 million of principal (sells only). The fee isn’t charged for values of $500 or less.
Trading activity fee of $0.000119 per share. No fee is charged for buying 50 shares or less.
American depositary receipt fee from $0.01-$0.03 per share when buying foreign stocks traded on American exchanges.
One of the site’s best features is that it sells fractional shares. Instead of buying one full share of stock, you can buy a fraction of an equity stock for as little as $1. According to Robinhood, fractional shares can be as small as 1/1,000,000, or 1 1-millionth of a share. Trading of fractional shares is done in real-time and is commission-free.
Most stocks worth more than $1 per share with a market capitalization of over $25 million are eligible for fractional share orders on Robinhood. If a stock isn’t supported on the site, it will let you know when you’re placing an order.
Pros and cons
Not into commitments? Robinhood makes it easy to start investing.
No monthly fees
No minimum account balances
Fractional shares of stocks sold
Not as many investment products offered as some competitors
Palantir Technologies Inc. was founded in Denver in 2003 by Peter Thiel, Nathan Gettings, Joe Lonsdale, Stephen Cohen, and Alex Karp. It’s a software company that specializes in big data analytics.
One of its projects that it’s most known for is Palantir Gotham. It’s used by counter-terrorism analysts in U.S. government agencies such as the Department of Defense to show in real-time how operations are progressing. While much of its business is from government contracts, Palantir has expanded to work with financial and healthcare industries.
Gotham, as the company website explains, is an artificial intelligence-ready platform that connects every aspect of the decision-making process to enable faster, more accurate operations.
In 2020, the software company started working with the National Health Service to track and contain Covid-19. It also developed a software called Tiberius for vaccine allocation in the United States.
The company is on track for revenue growth of 30% or more each year over the next two years, but its valuation multiple is too high. Palantir is also heavily relying on government contracts instead of adding more private companies.
Palantir price history
The share price of Palantir stock has dropped about 40% from its February highs, closing at $22 per share on March 30.
An analysis by the Trefis Team reported that the decline was driven in part by the broader sell-off in high-growth stocks, mixed December quarter earnings, and the expiration of the company post-IPO lock-up period in February, which enabled insiders to sell shares.
Palantir stock had its IPO in September 2020. It almost tripled in price by late November 2020 and hit a closing high of $35.18 on January 29, 2021. It has since dropped by almost half, to around $21 per share at the end of March. But if you bought the stock in October, when it was around $10, you would have doubled your money by now.
When Palantir stock was first sold to the public on September 27, 2020, the opening price was $10 per share. If you bought $1,000 worth of stock, that would equal 100 shares. Owning those shares through March 30, when PLTR closed at $22 per share, your investment would be worth $2,200.
One of its biggest shareholders is Cathie Wood. Wood’s Ark ETFs added 2.6 million shares of Palantir on March 3 as share prices were falling. Her ETFs acquired 6.8 million shares of Palantir in February, which looks bullish.
Palantir dividend information
Palantir does not pay a dividend as a new company reinvesting the vast majority of its proceeds back into the business.
The software company’s expenses are growing as the company grows, and high expenses impact any possible dividend that Palantir may want to pay.
“Even though the company was profitable in its first quarter, Palantir is only expected to earn $0.08 this year,” Sure Dividend reported in December 2020. “Earnings-per-share are expected to grow by 50% next year (2021) to $0.12.
If the company wanted to allocate half of 2021’s earnings-per-share to a dividend, then shareholders might receive a quarterly dividend of $0.015. That equals a yield of just 0.2% at the price in December, which likely wouldn’t appeal to investors looking for income.
Instead, Palantir is better off using its cash to make an acquisition or help the business grow in some other way. It expects it will be at least 5 to 10 years before Palantir can pay a dividend.
Best features of Palantir stock
Following the investments of successful people can be a winding road, especially if you don’t have a big bank account to afford losses if a stock goes south. But following Peter Thiel, who has invested his time and money in Facebook and PayPal, could be worthwhile. Thiel founded Palantir and is its largest shareholder. (He named the company, as well.)
Palantir’s growth prospects are increasing, which should allow it to earn more money. Its platform can be used in a variety of industries, from defense to health care to food and energy. Unlike a lot of companies that go public, Palantir has quickly shown positive earnings results, starting at $0.06 per share in its first-ever quarter.
The company is relying less on its largest clients, which are government agencies. Most of its revenue comes from its top 20 accounts, but that reliance dropped from 68% of revenue in 2019 to 61% through the end of September 2020.
It is still run by the same leadership as when it was founded. Thiel remains chairman and Karp has been the CEO since 2004. Thiel, Karp, and fellow founder President Stephen Cohen account for at least 49.99% of voting rights through the various stock structures.
“This likely ensures that they will maintain control of the company as long as the three have the same interest aligned,” says Sure Dividend. “Other shareholders won’t be able to easily shift the company in a new direction should they wish to do so.”
Step 3: Open an account & buy Palantir shares
Opening an online brokerage account is easy. You don’t even have to fund an account immediately to open one, though you’ll need some money to buy at least one share of Palantir stock.
Using Stash, for example, is as easy as just about any other online broker. Start by clicking on the blue “Get Started” button on the homepage and many other areas of the Stash website.
An email account and password are the first things needed to create an account.
You’ll next be asked to provide some information about yourself so Stash can find out what type of investments you’re interested in. This is part of Stash’s aim of meeting your overall investment needs, and not just focusing on buying one stock.
You’ll provide your name, birthdate, phone number, citizenship status, residential address, estimated pre-tax household income (to evaluate your risk tolerance), and reasons why you want to invest.
Then you pick a plan, starting at $1 per month.
And, of course, pick a payment method.
If you go directly to the Investments page, you can look up a stock name or research stocks and ETFs to see if fractional shares are offered. You can also search by industry, and by ETF category.
Palantir stock can be bought in fractional shares, with as little as $5 invested. Click the blue “Check out on Stash” button and the account signup process begins.
How much were Palantir shares when the company first went public?
How much does it cost to buy Palantir shares today?
$22, as of March 30, 2021.
Does Palantir pay dividends?
What is the minimum number of Palantir shares that I can buy?
You can buy one share, or you can buy a fractional share. Stash doesn’t list the minimum fractional share that can be bought, though it says the minimum investment is $5. Robinhood sells fractional shares in shares as small as 1 million parts of a share of stock, for as little as $1.
The bottom line
Palantir had a good run into early 2021, though its price has since dropped nearly in half. Still, good prospects could be on the horizon as it works with clients on big data issues during the Covid-19 pandemic. Your investment is unlikely to have as big of an impact as Dolly Parton’s $1-million donation to help fund Moderna’s Covid-19 vaccine research however.