While Palantir Inc (ticker: PLTR) describes itself as a company that makes “products for human-driven analysis of real-world data”, many others point out that it’s specifically a highly-specialized intelligence provider to governments and militaries aligned with the United States. Given that the founding of the company was backed by a grant from In-Q-Tel – the C.I.A.’s venture capital arm – the company is certainly not going to beat the allegation that it’s deep within the folds of the United States’ military machine.

What’s currently unmissable is that its second quarter (Q2) earnings report of its Fiscal Year (FY) 2025 release made on the 4th of August 2025 signalled a breakthrough: Palantir surpassed $1 billion in quarterly revenue for the first time in its history and then went on to hike its full-year guidance. This went on to send the stock price soaring.

Trend Analysis

As of the first half (H1) of the FY 2025, trends so far indicate that the company is set to grow its revenue by 32% over the previous FY, which had seen a nearly similar growth. Meanwhile, its earnings per share (EPS) trend also shows a similar mirroring of recent growth.

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Source: Company Information; Leverage Shares analysis

If current trends continue, diluted EPS is set to grow by 122% over the previous FY’s EPS, which also showed a largely similar trend over the year before. This was achieved largely by a tempering of spends versus revenues. In FY 2020, R&D consumed 51% of revenue. By 2024, this was down to 18% and hovering at the 14% mark as of H1 2025. Stock-Based Compensation (SBC) – initially a contentious issue for the company’s balance sheet – went from equalling 66% of expenses in FY 2020 to 35% in FY 2024. As of H1 2025, it’s at 29%. Diluted EPS as of H1 2025 is at $0.21 while that of the entirety of FY 2024 was $0.19.

As the World War II-era adage goes, “loose lips sink ships” and the company isn’t ready for maritime losses yet. While it doesn’t explicitly go into detail as to what sort of services it provides or give examples of thereof, articles in the media help shape a picture that the company neither confirms nor denies. One in-depth article published in August last year by the New York Times – and which involved a significant amount of interaction with CEO Alex Karp – gave examples of the company’s work¹:

“Palantir got its start in intelligence and defense — it now works with the Space Force — and has since sprouted across the government through an array of contracts. It helps the I.R.S. to identify tax fraud and the Food and Drug Administration to prevent supply chain disruptions and to get drugs to market quicker.

It has assisted Ukraine and Israel in sifting through seas of data to gather relevant intelligence in their wars — on how to protect special forces by mapping capabilities, how to safely transport troops and how to target drones and missiles more accurately.“

The company makes a delineation between government and commercial clients as an indication of its breadth of service. As of H1 2025, the split has been stable since FY 2023.

Source: Company Information; Leverage Shares analysis

It isn’t entirely clear if this delineation is meaningful: while “Government” revenue does mean direct payments from government sources, “Commercial” revenue could be from private enterprises making payments for handling projects also being carried out for a government. Given the very limited information provided by the company, it can be assumed that most revenue for the company is earned from the government, either directly or indirectly.

With the “One Big Beautiful Bill Act” making additional allocations in both military and security applications, it can be assumed that Palantir will continue to make hay.

In Conclusion

As of the 5th of August, Palantir’s Price-to-Earnings (PE) Ratio on a trailing basis was a staggering 575.84 while that on a forward-looking basis is well over 310. By either measure, the company’s stock is massively overvalued; however, a certain demographic of the global investor base has a very strong conviction that its revenue streams will be secure. If it is assumed that the majority of the company’s revenue is from government, there is a strong likelihood that this revenue uptrend being forecasted is likely to be met. However, the stock’s overvaluation is likely to make this a bumpy ride along the way.

Professional investors in Europe might want to consider Exchange-Traded Products (ETPs) to capitalize on the volatility of the stock’s trajectory: the +3x Palantir Long ETP (PLT3) provides magnified exposure suitable during upticks of the stock’s trajectory while the -1x Palantir Short ETP (PLTS) is the equivalent of a short position without the need for maintaining a margin.

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