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Palantir (PLTR) Post IPO Update and Analysis on the Price of the Stock - YouTube
Channel: Healthy, Wealthy, and Wise
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palantir's quiet period ends and today i
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take a look at how the company's been
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trading since going public
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what the analysts are predicting and i
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share my own thoughts as to what factors
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i think
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are and will drive the stock price stay
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tuned
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[Music]
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welcome to healthy wealthy and wise the
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channel that has evolved to talk about
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all the big
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and not so big companies going public
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whether it's by traditional ipo
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a spac or even a direct listing today
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we're revisiting palantir
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a company that we've talked a lot about
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last month as they finally made the move
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to go public after about 17 years of
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being private
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but before we start i want to say a big
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thank you to all the subscribers who
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have stuck with me as we continue to
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grow the channel together
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and for anyone new here my name is kevin
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and i want to welcome you to the channel
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for the first time
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if you end up liking the video i hope
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you consider joining our community by
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subscribing
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after all it's free and it'll make sure
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you don't miss any information on the
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company that could turn into the next
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big
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thing and as always especially on a
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video like this
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please know that i'm not a financial
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advisor and while my videos are meant to
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be informative
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they should not be seen as a
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recommendation for you to take any
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action on the companies covered
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you should always do your own research
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or consult with your own financial
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advisor when making any investment
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decision
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with that said we talked a lot about
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palantir last month
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so if you're looking for information on
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the background of the company and
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details of its direct listing filing
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we're not going to rehash that here
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today but you can check out a playlist
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of videos i made that has all that
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information i'll link it for you in the
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description
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today let's start off talking about
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where it's traded since its debut and
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why i think it's trading there
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first of all a lot of people got caught
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up on the reference point that palantir
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cited as seven dollars and twenty five
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cents
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and noted how much higher palantir
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traded once it opened as i believe i
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said in the live stream that we had
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after our first day of trading
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that reference price didn't mean
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anything to me unlike a traditional ipo
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where we know the institutional
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investors set an ipo price which is
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actually what they pay for each share
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with a direct listing there is no
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institutional investors or banks pricing
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the shares
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so right off the bat that price didn't
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have any substance behind it
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again because no underwriters actually
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set that number or bought shares at that
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price
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now the week before the trading began
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there was a lot of speculation that it
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could have traded at 11.50
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the highest price that it traded at on
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the private markets in august
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however that price in august was hit
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only after word was out that the company
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was actually going public
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prior to that news the private shares
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were trading at a volume weighted
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average price of five dollars and 34
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cents in july
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and then in august the month where the
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filing went public the average price
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jumped to 7.31
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although it had actually traded as low
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as 4.17
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in that same month which was a low for
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2020. so even when you consider the bump
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that going public will do for the share
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price
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going up to 11.50 seemed high and would
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set up the direct listing for being
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deemed a disappointment
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by moving the price down to five 7.25
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the company almost assured a positive
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response because again
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considering where it traded privately
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and even adding a bump for going public
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there was no doubt that it could beat
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that reference price and there would be
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no negative repercussion by setting that
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price low because
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no one was actually buying shares at
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that price like what would actually
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happen a traditional ipo
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where you could leave money on the table
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with a low price being set
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so why is this important because as i
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also said in the live stream after day
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one
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i felt where the stock actually traded
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was in the ballpark of where it probably
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should
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and palutear got a lot of positive
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publicity for blowing past the reference
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price
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i remember getting a question on if it
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was overpriced at that time and i
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remember saying that it could be priced
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a little high
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but that i really thought it was
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definitely in a range i would be
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comfortable with
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unlike some ipo such as snowflakes where
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i just couldn't justify the price it was
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at
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after its first day of trading now after
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pounds here opened at ten dollars and
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spiked to just over eleven dollars on
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that first day
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the stock has settled in the trading
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range between nine and ten dollars since
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and i know that a lot of people's
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expectations would be that the stock
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would trade higher
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so we're going to talk about that in a
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minute but first i want to mention that
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today was the end of palantir's quiet
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period
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and i think what you saw today is one of
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the reasons that i cover them in our
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weekly ipo this week episodes
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in a day where the entire market was
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under pressure palantir was able to
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weather the storm and end with a five
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percent gain
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powered in the new market research
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released by analysts knowing a company's
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quiet period can help you trade the
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stock better
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if only in the short term i'm going to
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give you a lot of things to look for
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when it comes to evaluating palantir
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share price
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so hang in there with me but i did want
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to tell you that today
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there were at least five analysts that
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came out with price targets
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one at ten dollars two at eleven dollars
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and two at thirteen dollars
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when you add up the targets and average
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them out you get an average target price
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at eleven dollars and sixty cents from
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people who are actually paid to make
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these predictions
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so while on the surface the targets
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don't look super attractive
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after you look at the closing share
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price last friday before the analyst
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targets came out
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you see an expected rise or upside of
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the stock price by 22 percent
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now if you listen to a lot of fans of
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pilentire who write and make videos
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about them
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they're expecting the price to get to
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the upper teens or to the mid 20
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range relatively soon and some even say
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much higher than that
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now as i always say i can't see the
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future and so my predictions are no
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better than anyone else's
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but based on what i know about the
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company and the environment we're in i
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would be really surprised to see the
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stock jump into the 20
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range in the near future and not because
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the analysts of price targets are lower
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than that
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but because of a lot of underlying
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factors that i've considered so to
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finish up the video
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i'm going to go over the factors that i
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see impacting the company and by how
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much
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when it comes to where the stock is
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trading and where it can go
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first i'll tell you the things that in
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my opinion won't significantly impact
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the price
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beginning with probably the biggest
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issue that kept coming up before the
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direct listing
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was the company governance structure
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while there's no question that the
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structure is not friendly to shareholder
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power
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or that the owners can sell shares and
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still keep significant control
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which is somewhat appalling i just don't
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see this being a factor for most of us
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retail investors
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i know i have a lot of interest and
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personal experience in the stock market
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and yet i don't think that i'm so smart
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that i have a better grasp on how to
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change the company in a way that grows
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it better than the founders
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so i'm going to knock corporate coverage
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from being a major factor in the price
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right off the bat
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the second factor i think is overrated
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influencing share price is the
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uncertainty over the result of the
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election
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and as many of you know we don't talk
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politics on here but from a pricing
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consideration it is a factor due to two
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popular perceptions
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one is that the companies that contract
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with the government national defense do
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better with republican administrations
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and two that the markets do better
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overall when there is a republican
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president
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to the second point data consistently
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shows that which party holds the white
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house doesn't have a major bearing on
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the markets
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and historically even though republicans
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are considered more friendly to business
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the markets have actually performed
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higher during the years that the
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president is the democrat
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at the end of the day so many more
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factors affect the markets in general
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i just discount the impact of which
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party holds the white house
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and to the first point about companies
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showing business with the government in
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areas of national security
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i don't think a data analytics company
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is at risk for a huge combined
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administration
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as i've said before could their work
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with ice be impacted
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yes but it could also just change in
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what they're tasked to do in regards to
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immigration
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but business could also pick up with
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analyzing and tracking virus data in the
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current pandemic
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environment and palantir was still very
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much showing business with the
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government in the obama binding years
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with reports of them assisting and
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finding bin laden as well as uncovering
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fraud
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and if you go with the perception that
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democrats spend more i just don't see a
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company that has proven to be helpful to
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the government
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as one that would significantly be
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affected by a change in the
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administration
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do i think that some people might be
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concerned with investing in palantir
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because of the election
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i do but again in my opinion i just
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don't see this being a major factor long
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term either
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way on who wins the white house now
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let's get to some factors that hold more
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weight for me
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one is financials at the end of the day
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the financials will
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almost always supersede everything else
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there are two big numbers to look at
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one is that the company is expecting to
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reach revenue of over one billion
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dollars for the fiscal year
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and the company looks to be on track or
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at least close for the first six months
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of the year
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revenue is coming in at over 481 million
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dollars and for the trailing 12-month
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period
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revenue is coming in at just over 900
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million dollars hitting that billion
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dollar number has to happen for palantir
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and it looks like it will
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the other issue and maybe the bigger one
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is to see if they can start cutting
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their net losses down
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remember the company has been around for
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17 years without ever having shown a
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profit
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and i also see that sentiment weighing
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on where the stock is trading
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but this also looks to be on track when
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looking at net losses from continuing
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operations
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for fiscal year 2019 the company
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reported a loss of 580 million dollars
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for the trailing 12 month period the
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company is showing a loss down to just
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over 460 million dollars
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and even better for the first half of
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the year the net loss was down to just
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under 165 million dollars
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so the financials are trending positive
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but still the price is where it's at
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so in this case financials aren't
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superseding all
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so i have to ask what else could
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investors be looking for to drive the
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price up
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one of those things i believe is
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concerns over their customer base
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from their filing they report to having
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just 125 total customers with revenue
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highly dependent on three of them
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with those three customers representing
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almost a third of the total revenue
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obviously this is a risk factor to the
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price if they were to lose any one of
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those customers
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i also know that what i would like to
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see is more growth on the commercial
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side
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i like where they sit on the government
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part of their business but i really feel
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their opportunities on the commercial
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side
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and i'm looking to see more contracts
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obtained there they really need to show
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a growth in that customer base
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so this is one thing that i think is
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holding this price back
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moving up my list of what's impacting
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the prices concerns about the company's
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valuation dropping over the years
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in 2015 the company was valued in the 20
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billion range
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this year prior to the direct listing
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the company was valued at about half of
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that on the private markets when using
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the share prices we talked about earlier
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in the video
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the question i've asked myself is even
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after having considered how going public
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affects the valuation
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what have they done to deserve a much
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higher valuation than where they were
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and right now i haven't seen anything
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from them that does that when i consider
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what the private shares were trading for
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and saw it spike to around 11
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based on this filing to go public come
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out all the information we talked about
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was priced in it at that time as well
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so while i think the current price is
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within a reasonable range to drive the
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price higher
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i need to see more more customers
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beating revenue estimates and lowering
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losses
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that would help me feel comfortable in
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seeing the upside but what i feel is the
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biggest factor affecting the share price
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right now
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is the uniqueness of a palleter did with
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their direct listing
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that was locking up shares well typical
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for traditional ipos
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this is certainly not the norm for
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direct listings as of right now
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eighty percent of the existing shares
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aren't able to be traded
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and while they follow the lead of the
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traditional ipos on locking up shares
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they diverted on the length of when
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those lockups usually expire
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for ipos most expire at 180 days however
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for paluntier
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it will be less than that by
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approximately two months for them the
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shares will become available on the
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third business day following the release
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of fiscal year 2020 earnings
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and just so you know the fiscal year for
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palantir ends on december 31st
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so when this year's earnings come out a
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few weeks later we could see more
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volatility in the share price when those
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80 percent of shares are finally able to
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hit the market
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and with potentially a glut of shares
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hitting the market as insiders who've
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been waiting to capture their gains from
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when they were buying shares as low as
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417
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in august to me this is the top
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consideration i have in the near term
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for downside pressure on the share price
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so that's what i got for you and
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palantir what do you think
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do you agree with my assessment on the
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stock or not let me know in the comments
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what you think
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i hope you enjoyed this video and if you
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did please press that like button and
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share with your friends or on any of
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your social media sites and forums
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you're on
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anything you can do to help me grow the
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channel will allow me to justify putting
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more resources into it
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and again if you're new to the channel
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or just an occasional visitor
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we'd love to have you join the community
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you just got to press that little red
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we'd love to have you on board until
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next time thank you for watching and
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have a great day
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[Music]
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you
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