Under the Spotlight: Palantir (PLTR)
The most secretive company on the stock market, Palantir is consistently within the 10 most traded stocks on Stake. Despite a volatile start to its life as a public company, it is still outperforming the major indexes since listing. Let’s put Palantir under the spotlight.
Despite being relatively new to the stock market, Palantir ($PLTR) has been operating for almost two decades. Founded in 2003 by Peter Thiel of PayPal fame, the billionaire bankrolled the company in an effort to reduce the risks of terrorism following the September 11 attacks in the US. From working with the CIA in its early years, Palantir now includes most western government defence agencies and big commercial names like Airbus and Ferrari on their customer list. What exactly can a data-software company provide to such clients?
Describing what Palantir exactly does is not so straightforward. The company is deliberately vague on their product capabilities. On the surface, the company can be described as a big-data analytics platform. Most of their products revolve around giving employees of government agencies or consumer companies more transparent access to the magnitude of data Palantir gathers. We’re not talking about another Google Data Studio or Tableau though, Palantir’s technology takes it up a notch.
Palantir doesn’t just store and visualise data, they actively analyse and make recommendations based on the data too. This is made possible by their suite of mysteriously named Foundry, Gotham, Apollo and Metropolis products. In their simplest form, they give everyday workers access to big data without the need for SQL or other coding skills. On the more complex end of services are pattern recognition services that find anything from disgruntled employees to terrorists.
Understanding Palantir is probably best done by looking into some of its use cases.
The company worked with the US armed forces in Afghanistan. Their data recognised patterns in IED placement so soldiers could safely navigate streets.
Bernie Madoff has been convicted for running one of the biggest Ponzi schemes of all time, committing US$64b worth of fraud resulting in US$20b in investor losses. Palantir contributed to his arrest by streamlining the processing of 40 years of financial records and discovering abnormalities.
It’s not all crime and defence prevention, Palantir helped England’s National Health System during the vaccine rollout to better understand patient data.
To some investors, Palantir is AI, big data and surveillance gone too far. To others, it’s an opportunity to own a company in a big-money field with little to no competition.
Opening up the books
Palantir generated US$1.54b in revenue over the last 12 months of reported data. Revenue from governments slightly outweighs revenue from commercial streams. The company is still far from profitability registering a US$500m loss over the last 12 months.
Still, the company is growing quickly. Revenue grew by 34% year on year as Palantir increased their customer figures and the amount they earned per customer. The average top 20 customers by contract size grew to US$41m from US$30m. In their latest set of results, Palantir declared they serviced 237 customers in total.
On top of the data business, Palantir’s balance sheet includes a 9-figure startup portfolio and US$50.9m in physical, 100-ounce gold bars. At the time of purchase, the company said “we have to be prepared for a future with more black swan events” indicating the purchase is to protect against traditional currency collapse.
Their biggest PE investments include US$41m in personal jet company Lilium and UK based mobile healthcare business, Babylon Health.
Finally, a fun fact to finish…Palantir gets its name from the similarly named “seeing stone” in Lord of the Rings, a rock that allows holders to see into the darkness.
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This does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.