Palantir was announced in a direct listing last September, and the stock opened at $ 10. Since then, shareholders have taken a wild ride, trading up to $ 45 earlier this year. It’s now about $ 25, still 150% more than the listing date.
In the recently reported June quarter, Palantir had revenue of $ 376 million, up 49% from a year earlier. The company gained great momentum from its U.S. commercial business, which grew by 90%. Palantir sees revenue for the September quarter rising to as much as $ 385 million, and it further predicts that annual peak growth will be 30% plus by 2025.
But the essence of the story disappears into the noise – Palantir seems to succeed in controversy. Almost everything it does is outside the box. Palantir recently moved its headquarters to Denver from Palo Alto before last year’s share issue. The rationale stems from politics.
“When we started the company in 2004, the idea was to bring world-class software to our intelligence and military communities,” Palantir CEO Alex Karp told me in a June interview. “Numerous Silicon Valley companies have refused to cooperate with the U.S. government, either openly, quietly, or by pulling their feet. … I generally believe that choices have to be made in the world, and America has serious, tough, intelligent, and sometimes ruthless opponents. “
Palantir has also done unusual things with $ 2.4 billion in cash on its balance sheet. The company invests aggressively in PIPE or private equity investments, which are used in almost all SPAC mergers to increase capital raised. Palantir has committed $ 310 million to more than a dozen SPAC units or specialty procurement companies, according to its most recent SEC application. It has made $ 33 million in capital investments in three other companies.
The latest tranche includes $ 20 million for Fast Radius, which provides a “cloud production platform.” $ 15 million for Tritium, which develops electric vehicle chargers; $ 15 million to AdTheorent, which sells machine-learning adware; and $ 10 million to FinAccel, an Asian financial services firm.
All properties are registered as Palantir customers. On June 30, Palantir said it had commercial agreements with SPAC portfolio companies with a potential value of $ 428 million; revenue in the fourth quarter was only $ 3 million, or less than 1% of the total.
SPACs are a very speculative place for a public company to park cash. However, I argue that Palantir’s decision to provide capital to new customers is not as different as offering vendor debt financing for hardware purchases – such as
(IBM) and HP Enterprise (HPE) are making – or running solid venture capital programs
Nevertheless, it confuses some analysts. “While we don’t object to thinking outside the box, we believe the strategy may have gone too far, especially with software contracts that seem to be negotiated alongside Palantir’s investment in the same customer,” Citin Tyler Radke wrote in a recent research note.
The out-of-the-box strategy goes beyond SPACs. Last week, Palantir revealed that it bought $ 50.7 million worth of 100-ounce gold bars — a pretty weird business even for Palantir. I did a text search of the SEC database looking for references to gold bars and found only references to other gold companies. The movement brings about
(TSLA) Bitcoin purchases look mundane.
The fact that Palantir decided to buy physical gold is not an example
SPDR gold shares
The ETF (GLD) makes it even more strange. In the end, Palatnir looks similar to the doomsday rapporteur. I tried to follow with Karp the question of a sudden interest in gold, but Palantir refused to make him available.
One analyst who follows the company told me that the SPAC program and the gold attack are making Palantir a tough sale for institutional investors. You can see it in the community. The institutions hold only 25% of Palantir’s shares
(LUMI) 58% and
But the same analyst is still on the rise in Palantir and says it offers “very interesting solutions for buyers who require scale and sophistication”.
Palantir fanatically follows among individual investors, and the company plays to its fans. In the June quarter earnings call, Palantir answered nine questions from private investors and only four from analysts.
In traditional meters, Palantir is not cheap. Stock transactions estimate the sales of 2022 25 times. But remove the madness, and Palantir looks like the best single bet on the future of complex data analysis. Investors can’t take advantage of many other opportunities – and the world won’t become simpler or less dangerous.
Write Eric J.Savitz at [email protected]