Palantir (NASDAQ: PLTR) may be cheaper than its headline price-to-earnings ratio suggests, but one prominent value investor still refuses to buy it at current levels.
On episode TIP841 of the We Study Billionaires podcast, host Preston Pysh joined Daniel Mahncke and Shawn O’Malley to run Palantir through a structured growth stress test, arriving at a very specific entry price.
Pysh’s verdict was delivered plainly: “If you see the stock below $100 and nothing changes, count me in.”
Palantir closed Thursday at $185.93, more than 85% above that threshold, after surging 50.51% in a single month following a blowout second-quarter earnings report.
The $100 figure is the headline, but the more instructive element of Pysh’s analysis is the stress-test framework he used to reach it, one he applies to every high-growth stock.
The test is a thought experiment: imagine next quarter’s growth comes in at half the current rate, and ask whether you can explain why the slowdown happened.
Pysh used two contrasting examples to illustrate the framework, noting that slower growth at Lululemon (NASDAQ: LULU) is straightforward to diagnose, while deceleration at The Trade Desk (NASDAQ: TTD) is far harder to explain.
He was candid about The Trade Desk, saying, “I have absolutely no clue why the top line growth is declining, and I also have no clue where the bottom would be.”
Palantir falls into the same opaque category, with Q2 U.S. commercial revenue growing 149% year-over-year and total revenue expanding 92.83%, making any sudden deceleration deeply difficult to interpret.
Pysh acknowledged that if those numbers halved next quarter, most retail shareholders would struggle to name a cause, stating, “I’m just not sure how many would still claim to understand the business that well.”
Co-host Stig Brodersen reinforced the point from an ownership perspective, arguing that genuine investing requires thinking like a business owner, not simply holding a position.
Brodersen put it directly: “To be an investor, that really means you have to think like an owner and feel like you understand all of the variables affecting the business. And so if you’re just buying a stock and you don’t have that owner mindset… well then you’re just speculating.”
Brodersen also noted that a significant selloff could make Palantir “a really interesting entry point for folks who are willing to speculate more,” framing the distinction between risk categories rather than dismissing the stock outright.
Mahncke ran a two-scenario discounted cash flow analysis and concluded that, based on CEO Alex Karp’s own guidance, “the price-to-sales ratio would decline from about 60 today to about 20. And if you trust Karp’s estimates, the fair value is at about $240.”
The second-quarter results provide some support for that bull case, with GAAP operating income reaching $912 million, free cash flow hitting $1.220 billion, and management raising full-year 2026 revenue guidance to between $8.150 billion and $8.158 billion.
Pysh left room for his view to shift, acknowledging that a deeper understanding of Palantir’s Ontology platform and its potential as a switching-cost moat could change his assessment.
Still, waiting for a $100 entry carries its own cost, as Palantir has gained 623.18% over five years and approximately 2,809% from its January 2023 low.
At a forward price-to-earnings ratio of 108x, the stock leaves virtually no margin for error, and a business compounding at this pace may simply never return to the level Pysh is targeting.
His refusal to buy something he cannot fully explain is, as he frames it, a matter of discipline rather than dismissal, and it is a more grounded message for retail investors than a conventional price target.
