Patron Portfolio Review: $11k to $50k — Palantir, SoFi, Tattooed Chef

A look at a 355% growth portfolio by a patron of BullAcademy.org

Background

Taiwo has been a Premium patron of the BullAcademy.org channel on YouTube since January 2021. When he initially requested this growth portfolio review, he had only been investing for a few months prior, starting with just $11,000. At the time, he had grown has portfolio to $20,000. That's an 81% increase in only a few months.


The top stocks in Taiwo's growth portfolio are $PLTR Palantir, $IPOE SoFi, and $TTCF Tattooed Chef Inc. These companies have helped his growth portfolio rise as far as $50,000, 355% increase, around the market highs of February. Those were great times for everyone; there was a lot of excitement.

SPACs were recovering from a recent lows. $IPOE was announced in the first week of January and reached its peaks of about $26 on February 1st; that was growth of about 35%.

In the second week of February, Palantir was retesting its high of $39 from the end of January. The stock was up about 300% since its direct listing on the stock market.

Along with that, Tattooed Chef was trading steadily around $24 per share to start February after dipping slightly form its recent highs of about $27 per share at the end of January. The stock was still up about 8% for the year.

Taiwo's portfolio now sits at around $30,000, 173% above where it started.

Goal

In this memo, we will discuss each of the three top companies in Taiwo's growth portfolio that now sits around $30,000. I'll give you a brief summary of each company, how they make money, how much money they've made in the past, how they plan to make more money in the future, and who their notable competitors. From there, I'll provide my thoughts on the valuation, the competition, and whether I'd invest in each company.

Palantir

Summary

Palantir was co-founded by Peter Thiel in 2003 with the goal of supporting western governments, especially the USA and its allies, in the artificial intelligence race against their adversaries, such as China and Russia.

The company leverages machine learning and data analysis algorithms to detect unusual or suspicious patterns in large data sets in order to help governments and private organizations identify, predict, and report conclusions and outcomes.

Revenues

Past

In 2019, the Palantir’s revenue was $743M, which was a 50% increase over the $595M they achieved in 2018.
In 2020, the company’s revenue grew by 47% to $1.09B.

Future

The company is projecting revenue growth of at least 30% for 2021.That would bring them to at least $1.42B in revenues this year.

Profitability

Palantir has never reported a profit. The company's true contribution margins for their offerings was only 6.7% for 2019, according to their S1 filing.

It's unclear if the company will ever be able to make a profit given the nature of their sales process.


Competitors

There's Booz Allen and SAP. 

Booz Allen $BAH is a consulting firm with expertise in analytics, digital, engineering, and cyber, we help businesses, government, and military organizations transform. Booz Allen brought in revenues of $7.5B in 2020 (11.3% over 2019), and the company has a market cap is $11.5B. That's a sales to price multiple of 1.5X.

SAP $SAP is one of the world’s leading producers of software for the management of business processes, developing solutions that enable effective data processing and information flow across organizations. $SAP made $31B in 2020 (1.2% over 2019) and has a market valuation of about $164B. That's a sales to share price multiple of 5.3X.

Both companies reported better contribution margins in 2019 with SAP reporting 5.7X more than Palantir.

Valuation

Past

On its direct listing day, Palantir was valued at $21B in 2020
After trading as high as $45 per share on January 27, 2021, the market capitalization of Palantir peaked at $69.89B.

Present

Today, April 18, 2021, the stock is valued at about $41B.

Future

With a 10X multiple on projected 2021 revenues of $1.42, we get to $14.2B market cap for 2021.

With a 21X multiple, we could expect Palantir’s market cap to end 2021 at $29.82B.With a 41X multiple, the company's market valuation could rise to as high as $58.22B by the end of 2021 if it holds its current sales to price multiple.

$IPOE SoFi

Summary

SoFi, founded in 2011, is a one stop shop for young high earners to earn, invest, save, and borrow money to build their wealth and manage their finances in a single place.


$IPOE, the SPAC by Chamath Palihapitiya's Social Capital, is taking the fintech company public.

SoFi also acquired a financial tech (fintech) infrastructure company called Galileo in 2020, which is used by the likes of Robinhood, Chime, Dave, MoneyLion, and many other of the largest fintech companies. 9 out of every 10 online neo-bank account created in 2020 was facilitated by Galileo. This is the AWS of Fintech.

As of March 2021, SoFi is also acquiring a bank to speed up its bank charter application. It's going to become an actual bank and cut out the middle man between itself and its lending and banking customers.

SoFi has also expanded internationally by acquiring Hong Kong's 8 Securities Limited, an investment app in 2020.

Most recently, the company is venturing into car loan refinancing via a partnership with MotoRefi.

Revenues

In 2020, SoFi’s revenue was said to be at $621 million.

Past

Future

In 2021, the company expects to bring in $980 million in revenues.That'd be growth of 57.8% over 2020.

In 2025, SoFi anticipates revenue of $3.67 billion. They expect to have compounded annual growth of 43% in their revenues over the next 5 years. This is a very fast growth company at the start of its journey.

Profitability

SoFi expects to hit profitability in 2021 delivering $27 million to the bottom line. In 2025, net income is predicted to rise to $1.17 billion.

Competitors

SoFi's main competitors are in the lending space. There are LendingClub, Earnest, Upstart, and Ally to name a few.

Upstart, which recently went public at the end of 2020, had revenues of about $233M. As of 2020, Upstart was growing its revenue by about 40% YoY, which is very good. Upstart is currently valued at about $7.88B, which is about 34X its 2020 revenues.

Valuation

Past

In May of 2020, SoFi was valued at $5.7 billion.

The $IPOE SPAC deal values the company at $8.65 billion.That's an 8.8X multiple on their expected 2021 revenues.

Present

Today, with an expected 865.1M pro forma shares oustanding once the SPAC merger is completed, the market is valuing SoFi at about $14.12B given a share price of $16.32 for $IPOE's stock as of April 16, 2021.That's an 14.4X multiple on their expected 2021 revenues.

Future

If SoFi is granted a sales to price multiple of a mere 15X, its stock could rise to just $14.7B to end 2021 and $55B in 2025.

If the stock achieves a price to sales multiple of 21X, it could be valued at $20.5B at the end of 2021 and $77B to for 2025.

If the market gives SoFi a forward sales to price multiple of 34X to match Upstart, one of its public fast-growth competitors, which SoFi is far larger than and is growing faster than, the company's market cap could rise to $33.3B to end 2021.Fast forward to 2025 with that same multiple, the stock could be valued at about $124B if it achieves or approaches the projected CAGR of 43%.

So we're looking at anything between $15B and $124B for a market valuation of SoFi between now and the end of 2025 if these numbers multiples are prescribed by the market.

For further comparisons, Square, a leading fintech company, did $9.5B in revenues in 2020 and is currently valued at $116B.

Tattooed Chef Inc.

Summary

Tattooed Chef is a leading plant-based food company offering a wide array of innovative plant-based food products that taste great and are sustainably sourced. Their foods are mainly frozen for those who want to eat healthy but don't want to cook their own meals.

Revenues

Past

In 2020, Tattooed Chef's revenue increased by $63.6 million, or 75%, to $148.5 million, which was just above the projection provided when the company announced its merger with Forum Merger II in the middle of 2020.

Future

The company expects to bring in $222M in revenues in 2021. The team also expects the percentage of their revenue coming from their branded products to grow from 52% to 63% this year.

Profitability

Tattooed Chef is a profitable business. For Q4 of 2020, Tattooed Chef reported net sales of $0.03 per share.

For the whole year of 2020, Adjusted EBITDA was $9.6 million, or 6% of revenuecompared to $6.9 million, or 8% of revenue, in the year ended December 31, 2019.

Competitors

The company provides Beyond Meat and Vital Farms among others as their comparable companies.

Valuation

Past

With 57.7M pro forma shares outstanding for the FMCI merger and a share price of $10, the company was valued at $577M

Present

Today, the company has a market cap of $1.37B with a share price around $17.
All time, the stock is up about 73%.

The stock currently has a price to 2021 expected sales multiple of 6.2XAs of mid 2020, Beyond Meat was trading at 12.2X their 2021 projected revenues while Vital Farms traded 6X respectively.

Future

Depending on the price to sales multiple the market decides to give Tattooed Chef, we can come up with a reasonable range for where its market cap could land at the end of 2021.

With a 6X multiple on $222M expected sales, $TTCF would have a market cap of just $1.33B, which would be down about 3% from its current valuation.

With a 10X multiple, the stock would be valued at $2.22B, which is a 62% upside from its current market cap.


With a 12X multiple, to match Beyond Meat, the stock would be valued at $2.66B, which would be a 94% increase.

Tattooed Chef has suggested that its project Net Sales CAGR of 61.7% between 2019 and 2021 will be greater than Beyond Meat's 58.6% and Vital Farms' 31.0%. Furthermore, its expected 2021 adjusted EBITDA margins of 13.9% would be considerably greater than Beyond Meat's 11% and Vital Farms' 5%.

My Thoughts

I like all three of these companies as long-term investments.

Palantir

About a week ago, I published a documentary on the history and future of Palantir along with its valuation and what I think the company may be worth in the future. While doing the research for that video, I became more conflicted than I'd been in the past. I started to get bullish on the company.

I like the numbers, but not the how the product is being used, so I'm not investing in it.
Nonetheless, I think it makes a good investment when you look at the numbers and the solutions the company offer its high-ticket customers.



There are significantly high switching costs, so they will be able to hold on to most of their customers for the long-term.

As we covered earlier, the valuation may be overpriced at this time, but time will tell. I think they'll be increasingly valuable in the long run. It's definitely a 10X opportunity given the increasing hostility between governments and competition between top companies.

$IPOE SoFi

I am most bullish on SoFi. It is the largest position in my portfolio, and I recently got it 4,000 shares. I'm happy to see that Taiwo is also bullish on this company.

The understatement here is that it's going to be hard for the market to properly value SoFi because they offer so many services and products to both consumers and business partners in various verticals.

What makes SoFi stand out from the rest is its centralization and vertical integration of so many services along with its fintech infrastructure unit. Its costs of revenue will only continue to be driven down as it attracts more members who they can upsell their profitable products too.


Tattooed Chef Inc.

I've been bullish on Tattooed Chef since its merger with FMCI was announced.

The company's vertical integration of its production and supply chain is unique in its industry.
Its growth rate is unmatched, and they are going after the demographics and markets of the future in frozen, plant-based foods.

Other Positions

Taiwo also has $PLNHF Planet 13 Holdings Inc, $MARA Marathon Digital Holdings Inc, and $NIO in his portfolio.

Planet 13 is a vertically integrated leader in delivery of retail concepts & cultivations in the rapidly growing Nevada cannabis market. Innovative.

Marathon Digital Holdings, Inc. is a digital asset technology company, which mines cryptocurrencies, with a focus on the blockchain ecosystem and the generation of digital assets.

Nio, a competitor to Tesla in China and other markets, designs and develops smart, high-performance, electric vehicles.



Conclusion

Taiwo has the right kind of diversification: by sector. He's in government contracting and the AI revolution with $PLTR, banking and lending with $IPOE SoFi, plant-based foods with $TTCF, the cannabis revolution with $PLNHF, the electric vehicles with $NIO, and blockchain technology with $MARA.

So long as Taiwo truly understands these industries, I think this is a great composition of areas to be invested in given what many of us believe the future will hold.

Sources

$PLTR Palantir

$IPOE SoFi

$TTCF Tattoed Chef, Inc.