馃攳
Palantir (PLTR) IPO: Updated Analysis including Share Price & Valuation [Direct Listing] - YouTube
Channel: Healthy, Wealthy, and Wise
[5]
[Music]
[8]
today we're talking palantir and their
[10]
direct listing anticipated to hit the
[11]
public market this upcoming week
[13]
we've talked about them in other videos
[15]
and i have to say that based on the
[16]
opinions and the comments
[18]
this seems to be the most polarizing
[19]
company we've discussed a lot of people
[22]
either love them or hate them
[23]
but now that we're on the eve of the
[24]
company going public i thought it would
[26]
make sense to take a deeper look into
[28]
the company
[28]
and go over the most up-to-date
[30]
information to see if this company makes
[32]
sense as one to invest in
[34]
but first i'm kevin and i want to
[36]
welcome you to healthy wealthy and wise
[38]
the channel that has evolved to talk
[39]
about all the big and not so big
[41]
companies going public
[42]
whether it's by traditional ipo a spac
[45]
or direct listing
[46]
and with that evolution and talking
[48]
about newly available companies to trade
[50]
the channel has really grown i want to
[52]
thank everyone that has subscribed and
[53]
become a part of the community
[55]
your interest in supporting the channel
[56]
has been a huge source of motivation for
[58]
me
[59]
and for those of you here for the first
[60]
time no pressure
[62]
watch the video and if you end up liking
[64]
it definitely consider subscribing
[66]
by subscribing and turning your
[67]
notification bell on you'll be sure to
[69]
catch all the news and analysis on the
[71]
latest companies going public with our
[72]
weekly feature show
[74]
ipo this week and the information we
[76]
cover
[77]
could make sure you don't miss out on
[78]
the next big thing especially in one of
[80]
the hottest times for ipos
[82]
as always please know up front that i'm
[84]
not a financial advisor
[86]
and when my videos are meant to be
[87]
informative they should not be seen as a
[89]
recommendation for you to take any
[90]
action on the companies covered
[92]
you should always do your own research
[94]
or consult with your own financial
[95]
advisor when making any investment
[97]
decision
[98]
okay let's get into palantir a company
[100]
with top secret credit notoriety
[102]
they probably predicted me making this
[104]
video for some background
[106]
the company's full name is palantir
[108]
technologies incorporated
[109]
which actually comes from the lord of
[111]
the rings where the magical palantir
[113]
were seeing stones
[114]
which allowed their users to communicate
[115]
with each other or to see faraway parts
[118]
of the world
[119]
the data analytics company whose
[121]
headquarters is being moved from palo
[122]
alto to denver
[123]
was founded in 2003 with their initial
[126]
mission being to build software for us
[128]
intelligence agencies for
[129]
counterintelligence purposes
[131]
with their ultimate aim being to reduce
[133]
terrorism while preserving civil
[134]
liberties
[135]
to that point the company has been
[137]
widely reported to have helped the us in
[139]
finding osama bin laden
[141]
on a more recent note the company has
[143]
been assisting governments to earn the
[144]
pandemic in tracking and analyzing the
[146]
data on the virus and its spread
[148]
two of the company's founders are people
[150]
with names you might be familiar with
[152]
first is peter thiel the current
[154]
chairman of volunteers board of
[155]
directors
[156]
who first became widely known when he
[157]
co-founded the popular online payment
[159]
platform paypal
[160]
before taking it public where it
[162]
eventually was sold to ebay
[164]
teal is also known as having been the
[166]
first outside investor in facebook
[167]
where he initially took a 10 stake into
[170]
the company before selling much of it
[171]
for big money
[172]
he does however continue to sit on
[174]
facebook's board of directors
[176]
and his name alone no doubt brings
[177]
investors to the table of any company
[179]
he's involved with
[180]
the other name you might be familiar
[182]
with is alice carp who also is the
[184]
company's ceo
[185]
carp and teal in particular have an
[187]
interesting dynamic and one that
[188]
ultimately is why so many people have a
[190]
strong feeling about the company one way
[192]
or another
[193]
and that dynamic is political where teal
[194]
is a republican that has been a strong
[196]
and vocal supporter of president trump
[198]
while carp is a self-described socialist
[200]
and progressive who reported that he
[202]
voted for hillary clinton
[204]
and beyond the two men the company has
[206]
seen some of its biggest criticism from
[207]
its work with developing software for
[209]
u.s
[209]
immigration and customs enforcement
[211]
commonly known as ice
[212]
in which ice has used palantir software
[214]
for years to track down undocumented
[216]
immigrants
[217]
one report specifically revealed that
[219]
volunteer software was critical in an
[221]
operation to arrest the parents of
[222]
illegal immigrant children
[224]
now i bring this up not to talk about
[225]
politics this channel is not about that
[228]
i bring it up because it is a company
[230]
that has been branded as a political
[231]
company
[232]
fair or not which in the year 2020
[234]
probably helps to explain the love or
[236]
hate views of the company
[237]
for the sake of this video we're going
[239]
to just take a look at the merits of the
[240]
company itself
[241]
in determining if an investment it makes
[243]
sense so in any discussion of the
[245]
comments
[246]
i hope we can trust each other to keep
[247]
that focus now it is fair to ask how the
[250]
election might impact the company
[251]
financially
[252]
so we will talk about that in a little
[254]
bit one other thing to address is the
[256]
hot button issue of privacy and data
[258]
privacy concerns are everywhere nowadays
[260]
in the era of big tech
[261]
and like many companies there are
[263]
concerns about how the data on us is
[264]
being collected and used
[266]
especially considering how data is being
[268]
used with ice to result in a significant
[269]
impact on people's lives
[271]
carp makes a direct point in saying that
[273]
palantir has repeatedly turned out
[275]
opportunities to sell collect or mine
[277]
data with that point
[278]
he claims that they act differently than
[280]
some of the other big tech companies out
[281]
there
[282]
so that's the background of the company
[284]
that catches people's attention
[285]
and we haven't even talked about the
[287]
company's product yet so we need to do
[289]
that
[290]
palantir currently has two principal
[291]
software platforms that has developed
[294]
the first is named gotham and was
[296]
constructed for analysts at defense and
[298]
intelligence agencies who didn't have
[299]
the software they needed to do their
[301]
jobs
[302]
early on in afghanistan and iraq
[304]
soldiers were having to map networks of
[306]
insurgents and makers of roadside bombs
[307]
by hand
[309]
gotham was able to identify patterns
[310]
hidden deep within data sets
[312]
ranging from signals intelligent sources
[314]
and reports from confidential informants
[316]
in order to help u.s and allied military
[318]
personnel find what they were looking
[320]
for
[321]
gotham's use has now extended beyond
[323]
intelligence analysis into defense
[325]
operations and mission planning
[327]
later the company determined that the
[328]
challenges faced by commercial
[330]
institutions when it came to working
[331]
with data were similar to a government's
[333]
experience
[334]
as companies often struggle to manage
[336]
and make sense of the data involved in
[337]
large
[338]
projects and this resulted in the second
[340]
platform being developed for these
[341]
commercial clients and they named it
[343]
foundry
[344]
the platform transforms the way in which
[346]
organizations interact with information
[348]
by creating a central operating system
[349]
for their data with the development of
[351]
foundry
[352]
the company is trying to get away from
[354]
the more labor-intensive
[355]
and therefore more expensive approach of
[357]
developing software that is highly
[359]
customized to each customer
[361]
instead trying to deliver a product that
[362]
is much more scalable
[364]
it would amount to a significant savings
[365]
and cost for paluntier
[367]
in considering the company has yet to
[369]
have a profitable year becoming more
[371]
efficient in cost needs to be a focus
[373]
so let's now take a look into the
[374]
financials that the company is reporting
[377]
most recently paluntir reported revenue
[379]
of 742.5 million dollars in 2019
[382]
up 25 from the previous year and that
[385]
came alongside a net loss of 580 million
[387]
dollars
[388]
in the prior year its sales were 595.4
[391]
million dollars with a net loss of 580
[394]
million dollars looking more recently in
[396]
the first half of this year
[397]
palantir brought in 481.2 million
[400]
dollars in revenue and lost 164.7
[403]
million dollars
[403]
which reflects a growth rate of 49 over
[406]
the same period last year
[408]
once again i want to note that the
[409]
company has never been profitable since
[411]
its inception
[412]
now 16 to 17 years later much of that
[415]
has been due to high costs in research
[416]
and development
[417]
as is typical for companies looking to
[418]
grow the scale they're wanting to
[420]
some of the losses are also related to
[422]
significant executive and employee
[424]
compensation
[425]
in february it was reported that cash
[427]
bonuses for employees were replaced with
[429]
restricted stock units as a way to save
[431]
money
[432]
recent operating results have shown
[433]
improvements as their net loss decreased
[435]
to 164.7 million
[437]
over the first half of 2020 which was
[439]
down from a loss of 280.5 million
[441]
dollars in the first half of 2019.
[444]
obviously some of that can be attributed
[446]
to expenses being lower from the
[447]
shutdown cost by the pandemic
[449]
although by how much isn't clear some
[452]
other numbers that you might be
[453]
interested in for 2019
[455]
the average revenue per customer was 5.6
[457]
million dollars
[458]
the average revenue for the top 20
[460]
customers by revenue generated in 2019
[462]
was 24.8 million dollars the commercial
[465]
side of their business is growing as 53
[467]
percent of the total revenue came from
[469]
commercial customers in 2019.
[471]
in their s1 filing palantir reports that
[474]
their software is being used by
[475]
customers across 36 industries and in
[477]
more than 150 countries
[479]
as of the first half of this year its
[481]
platforms were being used by 125
[484]
customers which
[484]
obviously is a pretty small number
[486]
within that number is the us army who
[488]
had actually sued in 2016 over the
[490]
procurement process
[492]
for a new version of an intelligence
[493]
analysis system claiming that the
[495]
process was unlawful and wasteful
[497]
palantir ended up winning the contract
[499]
which accounts for 1.7 billion dollars
[501]
of the 2.9 billion dollars in potential
[503]
federal contract money has won since
[505]
that year
[506]
as for some of their bigger commercial
[507]
customers you can count airbus and bp
[509]
near the top
[510]
now while the company is getting a lot
[512]
of revenue from the top 20 customers
[514]
one risk issue is that just three large
[516]
customers made up 29
[518]
or almost a third of its revenue as of
[520]
june twenty twenty
[521]
that includes a single government
[523]
customer accounting for eleven percent
[524]
of its total revenue in that period
[527]
and then you have one large commercial
[528]
customer making up an additional ten
[530]
percent of its revenue
[532]
a loss of one of these customers could
[534]
result in a significant hit to the
[535]
bottom line
[537]
while looking to grow the company does
[539]
have some self-imposed restriction as to
[540]
who they will and will not do business
[542]
with
[542]
piloniere states that the company
[544]
generally does not enter into business
[545]
with customers or governments
[547]
whose positions are actions that they
[549]
consider inconsistent with the mission
[550]
to support western liberal democracy
[552]
and its strategic allies so maybe a
[554]
little peace of mind for anybody that's
[556]
concerned that they could do business
[557]
with an adversary of the us
[560]
palantir says that it plans to grow its
[561]
revenue by becoming the default data
[563]
solution within the us government
[565]
further expanding into the commercial
[567]
sector and expanding its reach with
[568]
existing customers
[570]
the company told its investors in april
[571]
that they expect to have 1 billion
[573]
dollars in revenue for 2020.
[575]
the company estimates that the total
[576]
addressable market for their software
[578]
across the commercial and government
[579]
sectors around the world
[581]
would be approximately 119 billion
[583]
dollars when considering the market
[585]
they exclude institutions and countries
[587]
or regions where they have chosen not to
[588]
sell their software as i just mentioned
[591]
as far as the market outlook is
[592]
concerned on defense i.t spending
[594]
according to a 2020 market research
[596]
report cited on thestreet.com
[598]
the global market was an estimated 81.3
[600]
billion dollars in 2019
[602]
and is expected to reach 98.8 billion
[604]
dollars in 2026
[606]
which represents a compound annual
[607]
growth rate of 2.8 percent
[609]
this expected growth is driven by
[611]
continued and increasing cyber security
[613]
threats
[613]
as well as changing intergovernmental
[615]
relationships regional and global threat
[617]
estimations
[619]
palantir plans to go public as per its
[621]
most updated filing on september 29th
[623]
almost a week later than it originally
[625]
proposed the company will list its stock
[627]
on the new york stock exchange under the
[629]
ticker pltr
[630]
with a direct listing even though the
[632]
rules have recently changed on direct
[634]
listings
[634]
palantir is not looking to raise any
[636]
capital therefore there are no
[638]
underwriters or proposed pricing
[640]
the company states that the purpose in
[641]
going public is for increased liquidity
[643]
for its current investors and employees
[645]
if you've watched my previous videos on
[647]
paluntier
[648]
you know that there are some interesting
[649]
aspects of the company's plan to go
[651]
public
[652]
the first one is of how the company
[653]
would be governed the finance describes
[655]
a unique three-class voting structure
[657]
where pallentier founders alex carp
[659]
stephen cohen and peter till will be
[661]
given special class
[662]
f shares that will ensure that they hold
[665]
49.9999
[667]
of the ownership of the company in
[668]
perpetuity meaning that if they sell the
[670]
underlying shares
[671]
they will still hold that percentage so
[674]
in effect
[675]
they could sell their shares and still
[676]
have a significant ownership stake in
[678]
the company
[679]
and then it got even more convoluted in
[680]
the most recent amendments
[682]
where it appears if one of the founders
[684]
leave the company their voting power
[686]
actually increases
[688]
because of this a risk factor was added
[690]
to the filing which states
[691]
quote although we currently are not
[693]
considered to be a controlled company
[695]
under the new york stock exchange
[696]
corporate governance rules we may in the
[698]
future become a controlled company
[700]
due to the concentration of voting power
[702]
among our founders and their affiliates
[704]
end quote so to clarify what a
[706]
controlled company is based on new york
[708]
stock exchange corporate governance
[709]
rules
[710]
is a company of which more than 50
[711]
percent of the voting power is held by
[713]
an individual group or another company
[715]
while the filing states that the
[717]
founders will own 49.999 percent there
[720]
are scenarios possible that they could
[721]
have over 50 percent control
[723]
if that were to happen public
[724]
shareholders in the company will likely
[726]
legally have zero input into the
[728]
governance of the company
[729]
this structure has really raised eyes
[731]
and has resulted in the multiple
[732]
amendments of the filing which has just
[734]
resulted in more confusion
[736]
however in the latest amendment the
[737]
filing does state that the stock that
[739]
will trade on september 9th
[740]
will hold only approximately 3.4 percent
[742]
of the voting power of the outstanding
[744]
capital stock
[745]
however it did add that the founders do
[747]
have a minimum threshold share they need
[749]
to hold
[749]
to keep that 49.99 voting power
[752]
although that number is relatively low
[755]
the second unique aspect to this direct
[757]
listing is that they will have locked up
[759]
shares
[759]
on the first day of trading which isn't
[761]
typical for companies going to the
[762]
direct listing route
[764]
from the cfo only twenty percent of the
[766]
existing shares and options can be
[768]
traded freely on the first day of
[769]
trading
[770]
for the remaining eighty percent of
[771]
shares they will become available in the
[773]
third business day following the release
[775]
of fiscal year 2020 earnings
[777]
as a heads up the fiscal year for
[779]
palantir ends on december 31st
[781]
so when this year's earnings come out we
[783]
could see more volatility in the share
[784]
price when those 80 percent of shares
[786]
are finally able to hit the market
[788]
so with no underwriters in a proposed
[789]
range how do we know what their company
[791]
is valued at and what the share price
[793]
would be
[794]
this has been a source of contention
[795]
among potential investors
[797]
well based on information from cnbc on
[799]
past fundraising efforts in the private
[801]
markets
[802]
the company was then valued to be in the
[803]
20 billion dollar range
[805]
and now when considering the average
[806]
volume weighted share price transaction
[808]
in the latest quarter of 6.45
[810]
cents investors are now valuing the
[812]
company at just over 10.5 billion
[814]
dollars
[815]
looking back to july palantir raised
[817]
410.5 million dollars by selling shares
[820]
at 4.75 cents a piece
[822]
according to the filing which comes out
[824]
to a valuation of about 7.8 billion
[826]
dollars
[827]
transactions over the quarter took place
[829]
at anywhere from four dollars and
[830]
seventeen cents a share to eleven
[832]
dollars and fifty cents a share
[833]
suggesting a range of six point eight
[835]
three billion dollars to eighteen point
[836]
eight billion dollars
[838]
but again if you consider the average
[839]
transaction was at
[841]
and 45 cents the company was being
[843]
valued at 10.5 billion dollars
[845]
about half of where it was valued in
[846]
2015.
[848]
now another example of how these numbers
[849]
are all over the place the wall street
[851]
journal is expecting the company to be
[853]
valued around 22 billion
[854]
when trading begins these numbers are
[857]
pointing to the stock trading in the
[858]
upper single digits to the mid teens
[860]
when considering the bump for being
[861]
publicly traded
[863]
considering the valuation might help you
[864]
decide at what price you're interested
[866]
in buying in
[867]
i'm curious to see what you think the
[868]
share price will be let me know in the
[870]
comments
[872]
now the elephant in the room is why has
[873]
the valuation apparently dropped so much
[876]
there are lots of theories from growth
[877]
being lower than expected while costs
[879]
were high
[880]
and that they have not been very
[881]
successful in growing their customer
[882]
base to a more substantial number
[884]
at the end of the day the valuation the
[887]
product and the growth prospects are
[888]
what's most important to me when
[889]
considering volunteer as an investment
[892]
being that i'm not an activist investor
[893]
looking to take over the company
[895]
the company's governance structure isn't
[897]
a major factor to me and i would imagine
[899]
to most of us on the channel
[901]
however if you're looking to influence
[902]
the direction of the company as a
[904]
shareholder
[904]
the pollen tier may not be for you now
[907]
we mentioned the politics of the company
[909]
at the beginning of the video
[910]
everyone has the right to buy or not buy
[912]
into a company that aligns with your
[913]
values so i'm not going to debate that
[915]
part of it
[916]
but as far as the election is concerned
[918]
there are legitimate questions how the
[920]
business will do depending on the
[921]
results
[922]
if donald trump wins as the incumbent
[925]
you would expect business doesn't change
[927]
much
[927]
during some major geopolitical event if
[930]
joe biden wins
[931]
this obviously is where the questions
[933]
begin mostly because of the notion that
[935]
republican administrations spend more on
[936]
defense than democrat ones do
[938]
in my opinion i just don't believe at
[940]
the end of the day that there will be a
[942]
huge amount of business either lost or
[943]
gained based on who wins or loses
[946]
could business related to ice be
[947]
negatively affected absolutely
[949]
but could business be impacted
[951]
positively because of the pandemic
[953]
absolutely do i see spending being cut
[955]
on anti-terrorism efforts
[957]
i don't especially when it comes to the
[959]
data analytics side of things
[961]
especially if as vice president biden
[963]
saw firsthand that palantir was critical
[965]
in the mission of tracking down bin
[966]
laden add to that
[968]
in 2010 when biden credited volunteer
[971]
for uncovering fraud
[972]
so there's evidence that he's valued
[973]
their efforts i'm just not seeing a
[975]
major impact to the business based on
[977]
the election
[978]
but again that is just my opinion but
[981]
the fact we even have to ask that
[982]
question
[982]
shows how important it is for palantir
[984]
to grow revenue outside of the
[985]
government
[986]
and there's reason to believe that the
[988]
growth on the commercial side has been
[989]
more muted
[990]
which may be a factor in where the stock
[991]
was trading privately
[993]
at the end of the day for me it comes
[995]
down to two big factors
[996]
do i think the company can grow the
[998]
commercial side with foundry
[1000]
and then based on that what the price of
[1001]
the share is i need to see more
[1003]
commercial customers come along for me
[1005]
to be willing to buy the stock at a
[1006]
higher premium
[1007]
without that i still see a lot of value
[1010]
in the company with our gotham business
[1012]
and still think it's a company to
[1013]
consider just at a lower price
[1016]
i do think the potential volatility of
[1018]
the stock and the downside risk of the
[1019]
stock will be muted out of the gate
[1021]
due to 80 percent of the shares being
[1022]
locked up which as i mentioned
[1024]
is atypical for a direct listing and
[1027]
that also leads me to consider waiting
[1028]
for the lock-up expiration
[1030]
if i think the stock is trading too high
[1031]
for me at its debut
[1033]
now anyone that's watched me for a while
[1035]
knows i won't tell you what to do
[1037]
or what i expect the price to be since i
[1039]
don't have that ability to predict the
[1040]
future
[1041]
if i could there's no other people that
[1043]
i would rather share the information
[1044]
with other than my community
[1046]
i just hope to pull in the information
[1048]
and try to share it with you in an easy
[1049]
to understand manner
[1050]
and share some of my thoughts on it and
[1052]
hope that you find value in that
[1054]
ultimately i always trust you to know
[1056]
what's best for you to do with your
[1057]
money based on your personal thoughts
[1058]
and situation
[1060]
hopefully talking about valuation and
[1062]
how the stock traded on the private
[1063]
markets
[1064]
is something you found helpful when
[1065]
determining what you think the shares
[1067]
should be worth
[1068]
so that's what i got for you on palantir
[1071]
if you're looking for more information
[1072]
on the company
[1073]
you might want to check a replay of the
[1074]
company's investor day live stream at
[1076]
vimeo.com
[1077]
backslash palantir while it's obviously
[1080]
meant to sell you on the company
[1081]
you may enjoy hearing more from the
[1083]
company's leadership including carp
[1085]
as well as some of their employees as
[1087]
for me
[1088]
i'll have more for you soon including
[1090]
the latest ipo this week episode where
[1092]
we'll talk about all the companies that
[1093]
i have scheduled
[1094]
to go public this week i hope you
[1096]
enjoyed the video and if you did
[1098]
please press that like button and share
[1099]
with your friends and on any of your
[1101]
social media sites and forums you're on
[1103]
anything you can do to help me grow the
[1105]
channel will allow me to justify putting
[1106]
more resources towards it
[1108]
and again if you're new to the channel
[1111]
or just an occasional visitor
[1112]
we'd love to have you join the community
[1114]
it's totally free
[1116]
you just gotta press that red subscribe
[1117]
button we'd love to have you on board
[1120]
and until next time thank you for
[1122]
watching and have a great day
[1137]
[Music]
[1144]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage