Value Investor Admits Palantir Cheaper Than Expected. He Won’t Buy Until This Price
A value investor ran Palantir through the same stress test he uses on every high-growth stock, and the result left him with a very specific price and a frank admission about what he still cannot explain.
On the latest We Study Billionaires episode, Preston Pysh admitted something value-leaning investors have quietly been thinking about Palantir (NASDAQ:PLTR | PLTR Price Prediction). The headline P/E overstates how expensive the company really is because the underlying growth is genuinely rare. Pysh still would not buy the stock here. His line, delivered with Daniel Mahncke and Shawn O’Malley on episode TIP841, was simple: “If you see the stock below $100 and nothing changes, count me in.”
Palantir closed Thursday at $185.93, well above that level, after gaining 50.51% in the past month alone on a blowout Q2 report. The $100 print is the easy takeaway. The more useful takeaway is the framework Pysh used to arrive at it, because that framework applies to every other AI-adjacent story in the market right now.
Halved-Growth Stress Test
Pysh’s tool for fast-growing companies is a thought experiment: imagine the next earnings report comes in with growth cut in half, and ask whether you can explain why. If you can, you understand the business. If you cannot, you are along for the ride.
He compared two cases. Slower growth at Lululemon (NASDAQ:LULU) is easy to diagnose: customers either switched to a competitor or stopped spending. Slower growth at The Trade Desk (NASDAQ:TTD) is much harder to parse, and Pysh admitted, “I have absolutely no clue why the top line growth is declining, and I also have no clue where the bottom would be.”
Palantir sits in the harder bucket. Q2 U.S. commercial revenue grew 149% year-over-year, and total revenue grew 92.83%. If those numbers halved next quarter, would a retail shareholder be able to name the reason? Was it AIP land-and-expand hitting a natural ceiling, government procurement timing, or competition from hyperscalers offering their own operational AI layers?
Pysh’s answer is no: “I’m just not sure how many would still claim to understand the business that well.” That is the correct thing for a disciplined investor to say when the machinery under a stock is opaque.
Owner Versus Speculator
Stig Brodersen framed the same idea from the other side. “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.”
The line between investing and speculating has little to do with the asset or the holding period. It has to do with whether you can articulate the variables driving the outcome. Much of Palantir ownership today sits on the speculative side of that line, which is acceptable if the position is sized accordingly. It becomes dangerous when someone has talked themselves into believing the position is conservative because the company is profitable and the CEO is confident. Brodersen noted that a real selloff could make Palantir “a really interesting entry point for folks who are willing to speculate more.” That is the useful framing.
Fair Reading of the Bull Case
Pysh left the door open wider than a passing listener might notice. His colleague Daniel Mahncke ran a two-scenario DCF and concluded that on 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 Q2 report supports that scenario in the short term. GAAP operating income reached $912 million, free cash flow hit $1.220 billion, and management raised FY2026 revenue guidance to $8.150 to $8.158 billion per the Q2 8-K.
If the Ontology platform is a real switching-cost moat inside government and enterprise workflows, forward multiples compress quickly. Pysh himself said that a better understanding of Ontology could change his view, and that the concession matters.
Cost of Drawing a Price Line
Setting a level and waiting is a real strategy with a real cost. Palantir is up 623.18% over five years and roughly 2,809% from its January 2023 low. A business compounding this fast may simply never revisit $100.
Waiting for a level that never arrives is how disciplined investors miss decade-long winners. It is also how disciplined investors avoid ruinous drawdowns, because a forward P/E of 108x leaves no room for a stumble (we wrote a free handbook on riding a mania without giving back the gains, here). Both statements are true at once.
Pysh’s position reflects intellectual discipline. He is refusing to underwrite something he cannot fully explain, which is more useful for a retail investor to hear than another price target. The reader’s job is to decide which side of Brodersen’s line they are on, and then size accordingly.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks.
