When you search for "Palantir" on Google, the search engine prompts with a few people related search options. The Top 2 being: "What does Palantir do?" and "Why is Palantir evil?" And I think that pretty much sums up Palantir.
The Peter Thiel-backed Uber-for-Defense-Contractors company launched its Initial Public Offering on the stock market last week. Two years ago, in October 2018, the company expected an IPO valuation of $41 billion dollars. Here's what happened when the stocks finally went live on September 30, 2020, according to Bloomberg:
Palantir started trading Wednesday, choosing to run a seldom-tested direct listing process instead of a traditional initial public offering. The stock closed Friday at $9.20, below the $10 per share it opened at on the New York Stock Exchange, giving the company a market valuation of $15.2 billion.
On a fully diluted basis, including all classes of shares and employee stock options, Palantir is valued at $20.2 billion. Just days into the secretive big data firm's journey as a public company, some shareholders have privately expressed frustration about the process, with accusations of technical glitches, misplaced records and disorganization that left some investors with an inability to sell shares.
CNBC reported that this disappointing stock performance may have actually been the result of a software glitch:
Several former workers, who asked not to be named because they weren't authorized to speak to the public, told CNBC that they and some current employees couldn't get into Morgan Stanley's Shareworks system.
The stock traded as high as $11.42 before closing at $9.50. Current and former employees were texting with each other about the problem and complaining of their inability to sell. One former employee followed up with CNBC to say the system finally started working late in the morning, Pacific Time.
On the same day, project management software startup Asan also went live on the stock market, opening at $27, up from a reference price of $21.
Palantir COO Shyam Sankar allegedly acknowledged, "How much of a luxury it really was [being private], of not looking at the stock price on a daily basis," according to Protocol, and insisted that he would remain "maniacally and monastically [focused] on creating long-term value."
Despite its overvaluation and disappointing IPO performance, Palantir isn't necessarily hurting. As CNN reports:
Revenue from government contracts made up $345.5 million, or 53%, of its overall revenue in 2019. In the filing, Palantir said the US government agencies using its software include the Department of Health and Human Services, Department of Homeland Security, the Securities and Exchange Commission, the Food and Drug Administration, the National Institutes of Health, the Centers for Disease Control and Prevention, Department of Veterans Affairs, Army, Navy and Air Force.
Peter Cohan at Forbes still advises that investors avoid the company at all costs, saying that "It burns through piles of cash" and "Its governance structure is investor unfriendly."
Palantir's COO says it was a 'luxury' being a private company [Shakeel Hashim / Protocol]
Palantir insiders struggled to sell shares at debut because they couldn't access trading platform [Ari Levy / Josh Lipton]
Palantir's Long-Awaited Public Debut Frustrates Some Investors [Lizette Chapman, Katie Roof, and Crystal Tse / Bloomberg]
Palantir, the controversial data company, makes its Wall Street debut [Sara Ashley O'Brien / CNN]
2 Reasons You Should Avoid Palantir Stock [Peter Cohan / Forbes]
Image: Cory Doctorow / Flickr (CC 2.0)
