How is Palantir Technologies (NYSE: PLTR) not already part of the S&P 500?

It’s a question many investors might be asking right now. Let’s dig into what’s going on, and why 2024 could be the year the company joins the benchmark index.

Why isn’t Palantir part of the S&P 500?

First things first: Palantir is an artificial intelligence (AI) and data analysis company. Its software helps organizations sift through large amounts of data and discover patterns that lead to improved outcomes and greater efficiencies.

Its stock debuted via an initial public offering (IPO) in 2020. Since then, the company’s market cap has grown to $53 billion, making it the 355-largest American company (as measured by market cap).

The S&P 500 is comprised of the 500 largest American companies by market cap with its stock listing on either the New York Stock Exchange or the Nasdaq. Other caveats for inclusion include a minimum $13.1 billion market cap, it has to have a certain minimum of shares available to trade, and the company must have positive reported earnings in the most recent quarter as well as on a trailing 12-month basis.

Until recently, Palantir didn’t qualify, as it was unprofitable. In its most recent quarter, however, this changed. The company is now profitable, both in its recent quarter and over the last year.

So what’s the holdup?

Palantir is likely to be added — eventually. The list is only updated quarterly, so it could be a matter of timing. There is also a matter of stability being considered. Selectors want to be sure this recent performance isn’t an anomaly. The company’s soaring revenue shows that continued profitability is highly likely.

A bar chart showing Palantir's revenue by segment.

A bar chart showing Palantir’s revenue by segment.

To sum up, Palantir is a fast-growing data analysis company valued at over $53 billion. While it is still early in its business life cycle, it’s now profitable, making it eligible for inclusion in the S&P 500. That addition is likely to happen by the end of this year, which could provide a boost to the company’s already soaring stock.

Should you invest $1,000 in Palantir Technologies right now?

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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Prediction: Palantir Will be Added to the S&P 500 This Year. Here’s Why. was originally published by The Motley Fool


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