Palantir – The Biggest and Most Influential Tech Company You’ve Never Heard Of
Discussion
Palantir Technologies is the newest and one of the biggest companies to announce an IPO in recent years. Palantir has been secretive about the details of the IPO, which is very symbolic when you learn about what the company does. The heart and soul of the company is data. Every data and data analysis tool there is, Palantir operates under. This includes public, commercial, proprietary, and consumer data. To give a few examples of how it is used, in 2009 JP Morgan used one of their services to monitor employees through email, browser history, download activities, cell phone conversations from JP Morgan owned smartphones, and GPS tracking from those same phones. In a slightly less sinister service, they also analyze customer spending based on merchant’s credit card records and demographics. Any way you slice it, it is almost guaranteed that Palantir has data on you.
Now, what about their revenue streams and customer base? They sell their products under the SasS model which, as we know, is exactly what Wall Street wants. Their customers are both in the financial services industry and in the US government. Their government affiliation is widespread across many different departments. From counter-terrorism to a license plate database. In 2019 Palantir’s revenue grew by 24% to $740MM. In the first quarter of 2020, their revenue reportedly grew by 49%. It would be a safe prediction that this growth will continue during this COVID-era as data is continuing to be more and more prominent.
The timeline of their IPO is unknown, but they have revealed they are listing their shares directly in a 3-tiered structure. Class A shares hold 1 vote, class B shares hold 10 votes, and class F shares hold “variable votes” that are held by the three founders. When reading this, my mind immediately went to the WeWork IPO fiasco where Adama Neumann, the founder, had 20 votes per share and was the majority shareholder. I could be wrong in assuming that these “variable votes” will give the founders complete control on voting but hearing the term variable votes does not sit well as an investor who wants their vote to matter. When Uber IPO’d, the CEO had established a “supervoting stock” when the company was private, but a few months after they IPO’d the shareholders managed to make the voting structure a 1 for 1 split after forcing his resignation. Having a variable voting structure is common in public companies, but that usually only pertains to “Class A” and “Class B” stock that give two uniform voting structures for all investors. Having super-voting is a red flag for corporate governance regulation. If the shareholders can not hold the executive team in check, who can?
Overall, there is not a lot of public data that we can find on Palantir regarding their financials. There is speculation that Palantir could IPO at $30 Billion, but like everything else about the company, only time will tell until we have any certainty. Their growth and customer base must be appealing to Wall Street, but time will only tell if Wall Street wants to nibble into the unknown.
Learn Something
Palantir Share Voting Power: https://www.marketwatch.com/story/palantir-publicly-files-to-list-stock-2020-08-25
WeWork Power Structure: https://www.vox.com/recode/2019/9/24/20882133/wework-adam-neumann-dual-super-voting-stock-shares-tech-ipo
Palantir Revenue Performance: https://www.forbes.com/sites/greatspeculations/2020/08/25/could-palantir-be-valued-at-30-billion/#4551970ce47d
What’s a Palantir?: https://www.nytimes.com/2020/08/26/technology/palantir-ipo.html