Those who believed in the hype and hype and didn’t get out in time were swept away.
By Wolf Richter for WOLF STREET.
Palantir Technologies, which went public in September 2020 via a direct listing amid massive hype and hype, has now earned a coveted spot in my Implosed Stocks column.
Today, Palantir reported another huge loss, this time of $101 million, on revenue of $446 million, bringing its total loss over the past four years to $2.86 billion. Its revenue outlook for the second quarter was below Wall Street expectations. Shares [PLTR] kathoomphed 22% so far today, and 84% from the January 2021 high to $7.40, a new all-time low. They are down 26% from the first exchange in September 2020 (data via YCharts):
The intelligence startup sells automated data analysis systems to the Pentagon, CIA, NSA, ICE and other federal agencies, as well as state and local agencies, including security agencies. police. Feeding the public trough of government agencies in this way sounds awesome for Wall Street in a macabre way.
Palantir became infamous when it emerged that police departments were using Automatic License Plate Recognition (ALPR) systems that take images of every license plate (plus the vehicle and occupants) that appears, and that Palantir software was used to browse the data. . But for Wall Street, this has only fueled hype and hype – think of the limitless prospects of installing these systems in every city across the country and around the world!
When the company went public in September 2020 via a direct listing, shares began trading at $10, giving it an inexplicable market capitalization of $16.5 billion. Shares then rose to $45 intraday on January 27, 2021, more than quadrupling in three months, giving the company an even more inexplicable market capitalization of around $80 billion, which shows just how much everything sh*tshow had gone crazy. And then stocks were shaken.
The company markets its software and services to enterprise customers, but government customers still generate more than half of its revenue, and revenue growth in the government segment slowed to 16% year-over-year. Palantir reported today in its slowest press release since the company began disclosing it as a public company in 2020.
But Corporate America, which has been deeply immersed in monitoring consumers and competitors, is the bright spot: U.S. corporate revenue jumped 136% year-over-year, and total global commercial sales increased. by 54%.
So the business of selling surveillance technology of all kinds to government agencies, US corporations, and global corporations is booming. And Palantir’s revenue is growing, albeit more slowly, amid a huge appetite for more surveillance and better analysis of the data obtained.
It’s just that Palantir continues to lose a ton of money year after year. It’s as if big taxi companies Uber and Lyft are losing a ton of money year after year, despite their huge revenues. Or like the huge used car dealerships Vroom and Carvana who lose a ton of money selling used cars; and they have now entered into an existential crisis.
And even if Palantir were to one day make a net profit of $100 million per quarter (instead of losing $100 million per quarter), that would represent earnings per share of only 5 cents at the current number of shares outstanding, and a year of that would equate to EPS of $0.20, and with a PE ratio of maybe 20, if revenue continues to grow, that would amount to a share price of $4, if the company one day find a way to get there.
They and hundreds of others all operated on the same principle. None of these businesses were ever designed to make money. They were designed to deceive investors. And it worked for a while, but started splitting company by company in February 2021. And those stock jockeys that didn’t sell in time got swept away.
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