Serial entrepreneur Peter Thiel became a billionaire through founding or backing some of the most successful companies in existence, mostly in the technology sector. He has a net worth estimated at $12.4 billion by the Bloomberg Billionaires Index, which places him at 197 on the list.

He co-founded what became the trailblazing digital payments giant PayPal (NASDAQ:PYPL), and after selling it to eBay (NASDAQ:EBAY) in 2002 for $1.5 billion, he became one of the first big investors in Meta Platforms (NASDAQ:META) when he took a $500 million stake in it when it was still a privately held company called Facebook. After it went public in 2012, he began selling off his shares and resigned from its board of directors in 2022.

Today he is a partner in the Founders Fund hedge fund, which has over $12 billion in assets under management. It owns significant stakes in a number of public and private companies, including SpaceX and Stripe, as well as Airbnb (NASDAQ:ABNB), Spotify (NYSE:SPOT), and Nu Holdings (NYSE:NU), the largest digital bank in Latin America.

Key Points About This Article:

• Peter Thief is a billionaire investor and a serial entrepreneur who has founded some of the most iconic companies of the modern day. He is also a big backer of many startups, many in the technology field.
• One of his biggest holdings is also one he is selling large tranches of stock from as its valuation has nearly quintupled over the past two years. 
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Big doings in Big Data

One of his largest holdings is in Palantir Technologies (NYSE:PLTR), the three-letter security state-backed data analytics giant he co-founded in 2003. Yet at the end of last year, Thiel filed with the Securities & Exchange commission a Rule 10b5-1 plan to sell some 28.6 million shares of Palantir by the end of 2025. 

Thiel owns nearly 100 million shares of Palantir through a handful of his personal investment vehicles, including Rivendell 7, Rivendell 25, PLTR Holdings, and STS Holdings. At the Big Data stock’s current price of $37.49 per share, that indicates he owns over $3.7 billion worth of stock.

Yet he’s making good on his promise to sell off the shares, and all throughout the year he’s been selling the stock. Considering Palantir soared 167% in 2023 and is up another 118% so far this year, it’s perhaps not surprising Thiel is locking in profits.

So if Thiel is selling PLTR stock, should you buy?

PLTR stock is up, but its valuation is up more

At its current price, Palantir Technologies is at an all-time high. It went public almost exactly four years ago at a price of $10 per share, meaning it has nearly quadrupled since then. Yet it is offered at sky-high valuations.

The stock trades at 220 times trailing earnings and 88 times next year’s estimates while going for 34 times sales. That’s a rich price to pay for a company growing revenue at 27% year-over-year. That’s robust growth, but it makes it hard to justify the valuation.

Moreover, Palantir’s sales can be lumpy. Because it sells to both the government and businesses, revenue can ebb and flow at different times. It is adding more customers every quarter — the number jumped 41% in the second quarter — but government sales can be mercurial.

Palantir also only became profitable on a GAAP basis relatively recently. That often can skew a stock’s earnings multiple, but with seven straight quarters of profits under its belt, the overvaluation argument seems to stick.

The best AI stock, but not at any price

The company is considered by some analysts to be the best pure-play artificial intelligence stock. Its Artificial Intelligence Platform (AIP) is finding itself deeply embedded in the government and enterprise sector, and should continue supporting Palantir’s growth on the commercial side. There seems little doubt AIP will aid Palantir’s long-term growth.

But all of that and more has been baked into PLTR’s stock price. Even with Wall Street forecasting long-term earnings growth at 56% annually, it pegs Palantir’s price at over three times the growth rate.

Palantir Technologies is a great company, to be sure, but not one at any price. Current investors should probably do as Thiel is doing and lock in profits. Those of us on the sidelines should wait for a better opportunity that is sure to come.

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