Palantir WACC - Weighted Average Cost of Capital
The WACC of Palantir Technologies Inc (PLTR) is 8.5%.
| Range | Selected | |
| Cost of equity | 10.0% - 14.4% | 12.2% |
| Tax rate | 3.7% - 5.2% | 4.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.4% - 9.6% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.34 | 1.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.0% | 14.4% |
| Tax rate | 3.7% | 5.2% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.4% | 9.6% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PLTR | Palantir Technologies Inc | 0.95 | 2.45 | 1.29 |
| ANSS | ANSYS Inc | 0.03 | 0.99 | 0.97 |
| AVLR | Avalara Inc | 1.73 | 0.98 | 0.37 |
| CDNS | Cadence Design Systems Inc | 0.03 | 1.5 | 1.46 |
| CSU.TO | Constellation Software Inc | 0.06 | 1.23 | 1.17 |
| CTXS | Citrix Systems Inc | 0.01 | 0.08 | 0.07 |
| DDOG | Datadog Inc | 0.04 | 1.43 | 1.38 |
| OTEX.TO | Open Text Corp | 0.93 | 1.26 | 0.67 |
| RNG | RingCentral Inc | 0.65 | 1.35 | 0.83 |
| SPLK | Splunk Inc | 0.12 | 0.37 | 0.33 |
| TEAM | Atlassian Corporation PLC | 0.02 | 1.6 | 1.58 |
| Low | High | |
| Unlevered beta | 0.83 | 1.17 |
| Relevered beta | 1.51 | 2.04 |
| Adjusted relevered beta | 1.34 | 1.7 |
Palantir's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for Palantir:
cost_of_equity (12.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.34) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.