Why Palantir failed winning investors expected Wall Street debut? Not all technology companies are the same or develop the same success during their IPO.
Although it generates a lot of attention from investors with a long-term approach, the stock market premiere of Palatinr, the company dedicated to creating data analysis software for government agencies and large companies, has not been as big as previously planned. Especially, compared to other firms in the same sector that have also begun their march in the markets.
So far, everything points to the fact that investors have become somewhat more demanding with the company as noted on its first trading day. And it is that the shares of the company founded by billionaire and supporter of Donald Trump, Peter Thiel, began to move about 10 dollars, above the top of the fork, set at 7.25 dollars, in the brochure of his OPV.
The $ 10 per security represents a market capitalization of $ 22 billion, which is not far above the valuation of the $ 20 billion it obtained in its last round of financing in 2015. What is striking is that bullish sentiment has cooled down to close at $ 9.5.
What is most striking is that, despite the appetite for new technologies across the Atlantic and the fact that Palantir enjoys the approval of long-term analysis firms such as Jefferies or RBC Capital, according to its latest notes distributed to its customers, prudence is becoming the most important priority with respect to Palantir.
All this, in a context in which the record number of IPOs on Wall Street has been broken, as shown by data from Renaissance Capital: almost 80 processes of OPV with a total placement of 29.000 million dollars. Hence the slight cooling over Palantir in the short term is decisive.
Even more so when other companies new to the markets, such as the case of Snowflake or Asana have had a diametrically opposite behavior. The former soared to double its capitalization, generating significant returns for its investors, including Berkshire Hathaway, Warren Buffett's investment holding company.
Palantir failed winning investors expected Wall Street debut
Therefore, the milder reception of the company founded by Peter Thiel highlights that investors can be insightful even in difficult times.
Asana, on the other hand, also had a successful long laying standing above $ 29 per title, compared to its opening at $ 27. A trend that did not end up being observed in Palantir.
” The company may have a long-term path, although it is true that the opacity of its business drives back some investors in a more immediate time frame, " comment in a note distributed to its clients analysts Jefferies, in order to seek an explanation of its early evolution.
A view they agree with from RBC Capital: "it owns 2.170 million diluted shares, so the potential valuation range is still very wide over the metrics in which it moves today."
However, according to Bloomberg, Palantir may be underestimating the potential impact of the dramatic changes taking place in the United States culturally and politically following this year's wave of protests over racial injustice.
The company's clients include several police departments and the Department of Homeland Security, and the use of its data mining software by federal and local law enforcement agencies is likely to increase thanks to privacy and profiling, Bloomberg reports.
Palantir was initially founded to help government military and intelligence agencies automate their surveillance capabilities and has since expanded to help companies obtain business information.
It collects all kinds of data - those that are necessary to achieve your customers ' goals. From bank accounts, images, or related numbers through Palantir software. In this way, it would have about 125 customers at this time, as described in its IPO brochure.
On the other hand, the presidential elections in November could also have serious consequences for Palantir. In late August, when it first asked the regulator to be listed, the company explicitly warned in its brochure that changes in " the leadership positions of government agencies, as a result of the 2020 presidential election,” could affect its business.
That would not be ideal for Palantir, as the government segment remains a fundamental engine for its growth. Last year, the company's sales to government entities accounted for about half of its sales.
Nevertheless, Palantir has marked 2020 to achieve profits and overcome losses of $ 491 million in 2019.
Similarly, those numbers say nothing specifically about the company. The reality is that, for the technology that has been released in recent years on the stock exchange, expectations have been cut downwards.
End of the article that represented Palantir failed winning investors expected Wall Street debut
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This is the life of Peter Thiel, the controversial president of Palantir, the mysterious 'big data' company that has just gone public in New York
Peter Thiel is one of the most controversial names in Silicon Valley. He was one of the founders of PayPal, whose sale to eBay made him a millionaire. He is now known to be the main face of the Valley supporting Donald Trump, although he has confirmed that he will pay nothing in his 2020 election campaign.
Thiel also stars as the CEO of Palantir, the Big Data company that has just gone public. He founded it in 2004 together with Alexander Karp-today the CEO— with the idea of using the software already used against tax fraud to detect terrorist activities.
Both Palantir and Thiel are controversial figures in the American technology sector. To get an idea of the character, it is enough to reference one of the information that became known this summer: Thiel, as a member of the Facebook board of Directors, would have met in 2016 with a key figure of American white supremacism.
And he said he "enjoyed" meeting this character.
Thiel's life has never been without controversy. His statements about how 'leftism' is —in his view— blocking progress in Silicon Valley are sound. He has written a book in which he tries to dismantle the" myth " of diversity.
Like Thiel, Palantir also elicits much criticism among American activists. The company already listed on the New York Stock Exchange works with the U.S. Customs Service, and its programs have been used to collect, store and search data from undocumented immigrants. It is suspected that his role would have been essential in raids against immigrants in the workplace.
In his debut in the parquet, Palantir saw how the price of his shares grew 38% above the initial price and reached a market capitalization of 18.800 million dollars—16.000 million euros -. Now, Thiel is once again the talk in the American press and his name is once again ringing across the Atlantic.
His family had first moved to the United States when he was just one year old. However, they moved several times before settling in Foster City, south of San Francisco.
At Stanford he also met many of the people who would later become the key names of PayPal-those later known as the PayPal mafia— and which included, among others, Keith Rabois, David Sacks and Reid Hoffman.
Thiel went on to hold court clerk interviews with U.S. Supreme Court judges Anthony Kennedy and Antonin Scalia, but did not get the job. "At the time, I was sunk," the investor wrote years later in his book Zero to one (from zero to one: how to invent the future).
Thiel and his friend David Sacks, the other author of the work, argued that the U.S. university system was bowing to political correctness, lowering its admission criteria and silencing critical thinking "in the name of diversity."
Palantir can analyze and identify photos, videos and other data for criminal activity. The company is today considered one of the most secret successful companies in Silicon Valley.
The CIA was one of Palantir's first investors, which has raised $ 2.42 billion and is valued at $ 20.000 billion. Karp has stated on more than one occasion that he does not plan to put it on the market or sell it.
The company is named after the spherical stones of the Lord Of The Rings by J. R. R. Tolkien. Thiel is known for being a big fan of literature, especially the books he read as a teenager because he was not allowed to watch television.
Then Facebook president Sean Parker spoke first with LinkedIn CEO Reid Hoffman. He, however, rejected the offer because of a possible conflict of interest with his own company and recommended Thiel.
Once inside, Thiel helped Zuckerberg through the different rounds of funding, although he remained on the sidelines of the day-to-day management.
Between the shares that Thiel sold in the company'S OPV and those that he sold shortly after, the PayPal co-founder also earned nearly a billion dollars. "My biggest mistake in life was not participating in Facebook's Series B," he replied during his participation in Reddit Ask Me Anything (AMA).
"The zero-sum world [which describes David Fincher's social network] has nothing to do with the Silicon Valley that I know of, but I suspect it's a pretty accurate representation of the dysfunctional relationships that dominate Hollywood," said Thiel during his Reddit AMA in response to what he thought of his character on the tape.
Founders Fund had a manifesto that said, "We wanted flying cars, and instead we got 140 characters," a little tweeting to express Thiel's disappointment with what he considered a lack of startup ambition. Despite this, Thiel is a fairly active angel investor and has backed nearly 80 companies such as LinkedIn, Yammer and Yelp.
Thiel compared Gawker to Al Qaeda in 2009. It looks like " because [it also] scares everyone." The episode, according to people close to him told Forbes, deeply marked Thiel and was one of the reasons explaining his crusade in court until the publication ended.
The Thiel Fellowship is based on Thiel's belief that college costs too much compared to what it offers. So, think, the smartest young people should avoid it and start pursuing their own ideas as soon as possible.
The scholarship program has become one of the most competitive and prestigious. To date, 104 young people under the age of 22 have participated in classes of between 20 and 30 students. Leaving school for at least two years is one of the basic conditions.
The world-famous wrestling ex-wrestler sued Gawker after the portal published a video in which Hogan had sex. The TV star won the trial and Gawker had to file for bankruptcy because he could not face the conviction of the case.
Thiel then admitted to having invested up to about $ 10 million in similar cases against Gawker. That attempt to obstruct press freedom in turn caused some concern about his role on Facebook's Board of Directors. In his first interview after his financial role in the case became known, Thiel assured the New York Times that, for him, Gawker was nothing more than a bully, an abuser. "I thought it would hurt me more than good, [but] one of my friends convinced me that if I didn't do something, no one would."
In January 2018, Thiel submitted an offer to buy the web which he himself helped bring down.
Facebook's Facebook board was still on Thiel, but the leak of an email sent to him by Netflix's CEO and then Facebook's board chairman, Reed Hastings, shows just how big his disagreement with Thiel was.
"I am very baffled by your support for Trump as president [of the United States], it is something that, for me, ceases to be a 'different opinion' to be a 'bad decision', " Hastings wrote in his mail. "The difference of opinion is healthy, but the catastrophically bad (in my opinion) is something no one would want in a fellow councilman."
Reed Hastings offered his resignation when the mail was published, but Zuckerberg refused. Y Combinator president Sam Altman, who has been working with Thiel since 2015, pledged to keep Thiel on the board of his own company despite everything. However, two years after starting their relationship as partners, Thiel and Altman took different paths.
"Every time I tell someone I've signed up [for cryogenics], there's always the reaction of it's Crazy, of it doesn't make sense. But I think it only upsets us because it tests our own complacency, " said Thiel once.
One of his projects is Ephemerisle, which, as Thiel describes it, " aims to be more like [the festival] Burning Man in the ocean."
In 2016 it became known that Oracle was considering buying Palantir. Previously, Palantir was in talks with Credit Suisse and Morgan Stanley for an eventual IPO during the second half of 2019.