After its creation 17 years ago with several billion dollars in venture capital investment, the initial public offering of Palantir Technologies (PLTR) is ready to launch. The Palantir IPO is due to start trading Wednesday.
The data analytics software company seeks to avoid the traditional IPO route. It will begin trading on the New York Stock Exchange through a direct listing under the ticker PLTR.
The company will float shares from existing holders and let the market determine the price per share. A reference price was set by the NYSE at $7.25, below the $10 price many expected. As a result, the private market valuation falls to about $16 billion, from near $20 billion.
The NYSE price is a guide for investors but does not dictate how the stock will open. There is no specified time as to when trading begins.
The CIA Was An Early Investor
Historically, Palantir has been highly secretive and somewhat controversial.
An early investor in the company was the Central Intelligence Agency. Palantir’s technology reportedly helped locate Osama bin Laden, while zeroing in on terrorists in Afghanistan and Iraq. The company acknowledges that government customers use its technology to kill people.
“Our software is used to target terrorists and to keep soldiers safe,” Chief Executive Alex Karp said in the Palantir IPO filing. “If we are going to ask someone to put themselves in harm’s way, we believe that we have a duty to give them what they need to do their job.”
Palantir gets both criticism and praise for the powerful nature of its data analytics software. For example. critics allege Palantir’s profiling tools used by intelligence and immigration agencies sometimes operate under extreme secrecy with little oversight.
Companies in health care, energy, and manufacturing sectors, among others, also use the software.
“Many of the world’s most vital institutions rely on the software platforms that we have built,” Karp said.
Palantir IPO: Founders Keep Control
Palantir was co-founded by billionaire and Trump ally Peter Thiel, an early investor in Facebook (FB) and a co-founder of PayPal (PYPL). The two other co-founders are Karp and Stephen Cohen, the company’s president.
The Palantir IPO established three classes of stock. The stock structure guarantees control of the company stays in the hands Thiel, Karp and Cohen.
For the six-month period ended June 30, Palantir reported revenue of $481.2 million, up 49% from the year-ago period. Also, it reported a net loss of $164.7 million, vs. a loss of $280.5 million in the year-ago period.
Palantir gave guidance for the rest of the year. In the third quarter, it expects revenue to rise about 47%, to around $278 million to $280 million. For 2020, it expects revenue of about $1 billion, up 42%.
Palantir has never reported a profit. For 2019, it reported a net loss of $579.6 million, about the same as in 2018. The company was founded in San Francisco but has relocated to Denver.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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