Palantir, Tech's Next Big IPO, Lost $580 Million In 2019 (nytimes.com) 52
An anonymous reader quotes a report from The New York Times: Palantir, a Silicon Valley company with strong links to the defense and intelligence communities, is poised to be the latest in a string of tech companies to offer shares on Wall Street well before turning a profit. The company sent financial documents to its investors on Thursday night, ahead of its planned debut on the public markets this year. The documents, obtained by The New York Times, offer the first full look into the company's financials and operations and show growing operating expenses as well as deep losses.
Palantir's revenue in 2019 was $742.5 million, nearly 25 percent more than the year before. Its net loss of $580 million was about the same as 2018. And expenses were up 2 percent in 2019 to a little more than $1 billion. The company, which has raised more than $3 billion in funding and is valued by private market investors at $20 billion, has not turned a profit since it was founded in 2003. As early as 2014, Palantir hadfanned expectations that it would soon hit $1 billion in revenue. Six years later, it appears to be closing in on that goal. In the first six months of this year, Palantir's revenue was $481 million. According to the documents, first reported by TechCrunch, Palantir plans to go public via a direct listing, "in which no new shares are issued and no new funds are raised," the report says. "In most direct listings, shareholders are not bound by a traditional lockup period before they can sell their stock. But Palantir has imposed a 180-day lockup period. It will allow shareholders to sell 20 percent of their common stock immediately, but they must wait for the lockup to expire to sell more."
"Palantir has arranged a structure to ensure that its founders retain power. They have a special class of shares, Class F, that will have a variable number of votes to ensure the founders control 49.999999 percent of the company's voting power, even if they sell some of their shares. The company argued to its investors that this structure would allow it to stay 'Founder-led' after it went public."
Palantir's revenue in 2019 was $742.5 million, nearly 25 percent more than the year before. Its net loss of $580 million was about the same as 2018. And expenses were up 2 percent in 2019 to a little more than $1 billion. The company, which has raised more than $3 billion in funding and is valued by private market investors at $20 billion, has not turned a profit since it was founded in 2003. As early as 2014, Palantir hadfanned expectations that it would soon hit $1 billion in revenue. Six years later, it appears to be closing in on that goal. In the first six months of this year, Palantir's revenue was $481 million. According to the documents, first reported by TechCrunch, Palantir plans to go public via a direct listing, "in which no new shares are issued and no new funds are raised," the report says. "In most direct listings, shareholders are not bound by a traditional lockup period before they can sell their stock. But Palantir has imposed a 180-day lockup period. It will allow shareholders to sell 20 percent of their common stock immediately, but they must wait for the lockup to expire to sell more."
"Palantir has arranged a structure to ensure that its founders retain power. They have a special class of shares, Class F, that will have a variable number of votes to ensure the founders control 49.999999 percent of the company's voting power, even if they sell some of their shares. The company argued to its investors that this structure would allow it to stay 'Founder-led' after it went public."
Good. (Score:5, Informative)
Palantir is a company that deserves to die, and all it's management to go bankrupt. (I'm assuming that this is the same Palantir, I didn't check. The one I'm talking about is the invasive spying company.)
Re: (Score:1)
Re:Good. (Score:5, Interesting)
Palantir is a company that deserves to die,
Only if Peter Thiel dies with it.
But seriously, the TFA is silly. Nobody buys IPO stock based on current profit/loss. Investors are looking for growth and Palantir had a healthy revenue growth rate of 25% last year.
I wonder if that growth will continue under a Biden administration.
Re: (Score:2)
it's not silly. people do or at least used to do care about profit/loss as a projection of what future might be. if they consistently spend 1 dollar to make 70 cents it's a stupid business and it's already scaled up to hundreds of millions of dollars.
people do look for current profit/loss, like if the business has been scaled up already and it still can't make a profit, then something is wrong.
that they are looking for an IPO on the other hand tells you exactly this: the current investors don't have faith i
Re: (Score:2)
people do look for current profit/loss
No they don't, they look for whether the share price is going to go up in the near term. The plan is to make a quick buck then leave the suckers who came after them with worthless pieces of paper.
Long term viability simply doesn't enter into it.
Re: (Score:2)
Nobody buys IPO stock based on current profit/loss.
Isn't that precisely why the WeWork IPO didn't happen though?
Re: Good. (Score:1)
Most people do. We know the best predictor success (Score:2)
> the TFA is silly. Nobody buys IPO stock based on current profit/loss.
Of course one would buy a stock (or not) based on expectations for the future. It seems to me most people who invest know the best predictor of future results is past results. Past performance doesn't guarantee future performance, but it's the primary indicator.
The company I worked for until recently was working toward an IPO and the most important thing we needed to accomplish in order to do the IPO was profitability. Becau
Re: (Score:1)
I wonder if that growth will continue under a Biden administration.
Biden and Harris both have a hard-on for big government so my guess is yes.
Re: (Score:2)
The whole "direct listing" thing makes it totally obvious that Palantir's existing investors are tired of excuses, know that the company is never going to be anything but a cash sink, and are looking to dump the stock onto greater fools. AND the deal is structured to entrench the management that's been unable to make the company profitable in 15 years on 3/4 billion dollars in revenue.
Direct listing just means that the company believes it is well-capitalized, i.e. it doesn't need to raise money by issuing new shares. (See https://www.nyse.com/direct-listing [nyse.com].) The TechCrunch leak didn't disclose balance sheet details so we won't know how much cash is on hand until the S-1 is released, but it's a safe assumption that they have enough to do a direct listing and push a secondary offering into the future, if at all. Those complaints about existing investors and being a cash sink can equally a
Re: (Score:2)
Re: (Score:1)
Like most SV companies it'll never create a product that generates ebitda under a competitive market structure. But it won't die.
In this case it will accelerate its attachment to the government teet like a parasite and keep sucking harder until it gets into the black. It's Tesla's business model (via taxpayer funded credits) to show a profit and has worked spectacularly so far. No reason to think Palantir can't rape the taxpayers to a fat payday too.
Re: (Score:1)
Re: (Score:1)
Re: (Score:1)
Palantir is a company that deserves to die
Now that they have moved their HQ to Denver, I wonder if they will move their primary offices too. Last I knew they had around 15% of the total office space in downtown Palo Alto under lease, and it will (at least in the short term) devastate the office market there if they move a substantial percentage to Denver. It might even be attractive to their local employees, as for what the employees Palo Alto home(s) will fetch on the real estate market they will be able to purchase quite the upgrade in the grea
Re: (Score:2, Informative)
Palantir is a company that deserves to die, and all it's management to go bankrupt. (I'm assuming that this is the same Palantir, I didn't check. The one I'm talking about is the invasive spying company.)
Not really. They don't spy, they analyse. Someone else is responsible for collecting data and handing it to them. That result can be used for evil (digging through Facebook data to more accurately target algorithms to influence elections), or good (We use Palantir to aggregate process data and predict effects throughout an entire plant that would be almost impossible to quantify otherwise, e.g. a pressure excursion on one part of a plant leads to increased bearing wear on a compressor in another part that r
Re:Good. (Score:4, Interesting)
How is your experience with Palantir?
I worked for a large company that used its service for optimizing production lines, tracking problems with the supply chain, things like that. It was absolutely terrible. Everything felt clunky, slow, inefficient. It is like they glued together pieces of open source software that are not made to fit. There are a few things they got right, but everything around it made it almost unusable.
In fact, my project manager did better by importing data and working with Excel. To be fair, he was really good with Excel, but still...
Re: (Score:2)
Very minor in scope is my experience, but generally excellent. Their Foundry platform seems to work really well (much faster at handling large data sets than special purpose local tools). Out of the box they provide a *lot* of analytics that are easy to use. Their digital twin system works really well but took for ever to get setup and the outputs of it were really impressive.
It does feel a bit they are making things up as they go along. Compared to the process analysis tools we've used in the past Foundry
Reckless at best (Score:2)
"Palantir has arranged a structure to ensure that its founders ...have a special class of shares...that...control 49.999999 percent of the company's voting power, even if they sell ... their shares.
I agree with the "deserves to die and its management go bankrupt" assessment. Will anyone seriously give money to a scheme where the founders can reduce their personal stake but still retain control?
Did anyone see Superman Returns? A Kryptonian crystal, thrown into a model lake, begins to boil the water and make the house shake ominously. Lex Luthor, unbeknownst to the others, bravely steps back behind everyone else to let them take the risk. This sounds a little like that.
Presumably their compensation
Re: Good. (Score:2)
Palantir does not "do spying". They don't collect data.
They make graph analytics software, stuff that tracks relationships between people, and between people and things, and between things. It is the kind of software used by police departments, militaries, cybersecurity firms, intelligence agencies, etc. It's also useful for things like contact tracing for COVID.
People always talk about Palantir like it is mysterious but the fact is it has A LOT of competitors in this space, and what the software does is fa
Eating cake and having it too?? (Score:5, Informative)
"The company argued to its investors that this structure would allow it to stay 'Founder-led' after it went public."
Translation: we take your money but will not give you a voice in how the company is running.
Seems like a less than optimal deal for investors.
Re: (Score:3)
Translation: we take your money but will not give you a voice in how the company is running.
If I own 0.0001% of the stock, I have no voice either way. I trust the founders way more than I trust random other investors.
Seems like a less than optimal deal for investors.
The evidence says otherwise. Several companies, including Google, also split voting from ownership. They have way outperformed the market.
Re: (Score:2)
If I own 0.0001% of the stock, I have no voice either way. I trust the founders way more than I trust random other investors.
That's fair, but people who own 20, 30, 40 percent may still be much smarter than both you and them.
Re: (Score:1)
In the UK owning 30+ percent of a listed company forces you to make an offer to buy the rest of the company, at a price no lower than the purchase that took you to (or over) 30% (or indeed, any other purchases in the previous three years).
If you own 29% of the company and don't intend to take over the company you're a stupid investor and we shouldn't listen to you anyway.
Re: (Score:2)
I'm hard pressed to find a point to that, but the UK has no more shortage of silly laws than anywhere else I suppose.
Re: (Score:2)
A lot of companies have voting and non-voting stock. A class of stock with a variable number of votes that allows the original founders to always have 50% say is new, and not a great idea.
Re: (Score:2)
"a lot" - not really, only a few high-profile companies that any normal person would consider to be a corrupt example of broken crony capitalism where "a share" means "just give me your money".
the company claims to have a product.. (Score:2)
that would make outside funding irrelevant. and which would be silly to sell if it worked.
it does seem like a scam. they also are preventing the current investors from selling all their stock, meaning that they don't even expect them to stick around because they know the product is bs.
Re: (Score:2)
Seems like a less than optimal deal for investors.
Maybe, maybe not. It seems like investors push companies to make some incredibly self destructive decisions at times. For the most part if you invest in a company it's usually because you trust the direction they are going and their leadership, not because you want to come in and change things.
Re: (Score:2)
many "activist investors" (ie rich dudes who can buy up enough stock to make a difference) do so in order to oust failing management or to encourage a change in direction.
in most cases they're a good thing, they work because they can shake up complacent management.
Do Evil (Score:4, Interesting)
At least Google pretends to not be evil. Palantir makes a sport out of doing as much evil as possible.
Re:Do Evil (Score:4, Insightful)
Re: (Score:2)
Google never had a no-evil mantra. That is an off the cuff reference to their IPO documents, it was never a formal policy, it was never a corporate mission statement, it never featured on their "About" page. But for some reason they mentioned it once in an IPO document and the world collectively lost its fucking mind.
Re: (Score:2)
You are mistaken.
https://en.m.wikipedia.org/wik... [wikipedia.org]
It did indeed feature on their IPO but it predated that and was used as their motto unto 2015, after which the imperative not to do evil was expunged. It did remain in the code of conduct unto 2018 but that too passed.
Google grew in the shadow of Microsoft who abused their monopoly position to great effect. I guess the spectre of evil loomed large in the early days, but time and money made it fade.
Re: (Score:2)
Google grew in the shadow of Microsoft who abused their monopoly position to great effect. I guess the spectre of evil loomed large in the early days, but time and money made it fade.
Nah, they just grew out of evil's shadow, and they missed the shade so they got some evil of their own.
Re: (Score:2, Insightful)
At least Google pretends to not be evil. Palantir makes a sport out of doing as much evil as possible.
Yes and no. Palantir is nothing more than a company that provides data analytics. Those analytics can support customers like the Kind Grandma's Baking Association of America, or assist Dictators and Election Stealers 'R' Us.
It would be nice if they turned down the latter, but ultimately they just provide services to customers. They are kind of like a contract builder. They can come and build you a lovely patio, or they can come and help you carve out a sound proof slave dungeon in your basement.
And to put i
Re: (Score:2)
. Palantir is nothing more than a company that provides data analytics.
That's justifying their actions by saying it's ok because they do evil things for money.
Re:Do Evil (Score:4, Insightful)
Yes and no. Palantir is nothing more than a company that provides data analytics. Those analytics can support customers like the Kind Grandma's Baking Association of America, or assist Dictators and Election Stealers 'R' Us.
Palantir was founded specifically to provide services to US intelligence TLAs in order to help them bypass the warrant process. That they have branched out into less evil work doesn't alter that.
Sauron (Score:2)
Feed the Zombie (Score:5, Interesting)
The company will never make a profit; it is not intended to make a profit. It is intended to pay the founders a big salary until it implodes, taking a billions of dollars of investors' money with it. See also: Uber.
With the "special class of shares", there's nothing anyone can to to stop the board awarding themselves whatever bonuses and pay they want. Basically, they're saying "we're going to rip you off; how much are you in for?" and they will still make a fortune.
The very highest grade snake-oil.
Re: (Score:3)
Not for nothing, Palantir has very real products and they're really controversial. This could also hedge against a takeover, since their products are some top notch internet surveillance tech.
It'd be nice if the company would die horribly in a tire fire, but this move makes sense
May they rot in hell (Score:2)
Please Explain? (Score:1)
Can someone with an actual clue, not just wild supposition from those without a clue, please explain to me how companies like this are able to acquire their venture capital and later market investors?
This 17 year old company, that has NEVER made a profit, somehow raised ~$2.5Billion dollars in funding to to earn a dismal ~$750million in revenue? They lost half a billion dollars in 2019 alone.
How do they lure investors? What does the investor see that I cannot? I feel like they've had ample opportunity to pr
Re: (Score:2)
How do they lure investors? What does the investor see that I cannot?
That they are now an integral part of the USA's secret information gathering apparatus, which is growing. They're double-plus good!
Re: (Score:2)
The stock market has become completely divorced from business fundamentals. People used to buy with the expectation that the company would return profits to shareholders as dividends. The amount you paid for the stock was related to what you thought the future dividends over time would be worth.
Unfortunately this is no longer the case. Today stocks are bought as a Ponzi scheme. The relevant metric isn't how much the company will pay over time, the relevant metric is how much can you con the next person into