Palantir moves NYSE direct listing date to September 29, values around $25.9 billion

Palantir Technologies, a data analytics platform focused on the government and financial sectors, is expected to begin trading on the NYSE on Tuesday, September 29, 2020, according to an amendment filed with the SEC on Friday. The company originally planned to begin trading on September 23.

The Registered Stockholders plan to sell up to 257 million Class A shares. The Registered Stockholders represent all major existing shareholders, including management.

During the third quarter of 2020 (through September 1), roughly 36 million shares were sold in private secondary transactions at prices ranging from $4.17 to $11.50, with a volume weighted-average price of $6.45. The company has also raised more than $900 million in new capital this year at $4.65 per share. If the company listed its shares at the $11.50 high end of the range, Palantir would command a basic market value of about $18.8 billion, or a fully diluted market value of $25.9 billion.

Unlike other direct listings, the company’s executive officers, directors, and certain other shareholders have entered into lock-up agreements, set to expire the third trading day following the release of financial results for the FY20. It plans to list on the NYSE under the symbol PLTR. As a direct listing without a firm commitment offering, there are no underwriters on the deal.

About Palantir

Palantir Technologies was founded in 2003 by Billionaire Peter Thiel and CEO Alex Karp, and booked $901 million in revenue for the 12 months ended June 30, 2020. It is an American software company specializing in big data analytics. Palantir’s software manages, analyzes and secures data. It finds useful patterns showing hidden connections within data, including phone records, addresses and credit transactions. And as the world has become more connected, the demand for Palantir software has gotten higher.

Palantir originally worked only with governments. But in recent years, Palantir branched out to work with businesses. In December 2019, Palantir announced a contract with the U.S. Army. It will be a four-year program totaling $440 million.

Palantir Stock: Financials Expose Unprofitability

Despite its government contracts, Palantir never made a profit. Investors were aware of this before the company’s filing made it a public fact, though.

In 2018, revenue was $595.4 million. And it increased by 24.7%, to $742.5 million, in 2019, putting the company closer to its goal of $1 billion in revenue. Palantir also saw an increase in revenue from the six months ended June 30, 2019 to the same period in 2020. Revenue increased 49%, from $322.7 million to $481.2 million.

But although revenue increased, so did expenses. In 2018, operating expenses totaled $1.05 billion. They increased to $1.08 billion in 2019, a growth of 2.2%. And for the six months ended June 30, they increased 2.3%. Fortunately, revenue outpaced expenses.

As a result, Palantir’s net loss is declining, putting it on the path to turning to profit. The fiscal years 2018 and 2019 saw similar net losses of $580 million and $579.6 million. But Palantir’s six-month figures highlight its promise. Net loss went from $280.5 million in 2019 to $164.7 million in 2020.

Palantir Delays Going Public

Palantir delayed for a few reasons. One thing to note is the large failures of prominent 2019 IPOs like Uber (NYSE: UBER) , Lyft (Nasdaq: LYFT) and Peloton (Nasdaq: PTON). In fact, before the coronavirus market crash, almost half of all 2019 IPOs were below their offer price. And Palantir wasn’t alone in the decision. WeWork also postponed its IPO.

Moreover, in 2015, Palantir gained a value of $20 billion. In 2020, Palantir Technologies wanted to reach a value of $26 billion. The company turned to foreign investors to raise an additional $1 billion to $3 billion in funding. Delaying the Palantir IPO gave the company time to reach out to other venture capital investors.

Another issue is the ethical use of its technology. Palantir’s software aids Immigration and Customs Enforcement. In the past, employees spoke up against the involvement in immigration policy enforcement.

 About E. J. McKay

E. J. McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.