Q: Palantir CEO Alex Karp on Monday characterized his company’s performance using a simple rule that has historically boded well for tech stock returns.
Karp said in a release that the company’s score with the “Rule of 40” was a 94%
Rule of 40 says that the sum of the revenue growth rate and the profit margin should be 40% or higher.
Do you use this?
How can an average investor measure & use it?
Can it be used on all stocks [company's]?
Thank you.
Karp said in a release that the company’s score with the “Rule of 40” was a 94%
Rule of 40 says that the sum of the revenue growth rate and the profit margin should be 40% or higher.
Do you use this?
How can an average investor measure & use it?
Can it be used on all stocks [company's]?
Thank you.
5i Research Answer:
It could be used on any company technically but it typically applies mostly to software...