{"id":3990,"date":"2021-03-13T00:24:09","date_gmt":"2021-03-12T23:24:09","guid":{"rendered":"https:\/\/www.simtrade.fr\/blog_simtrade\/?p=3990"},"modified":"2021-03-13T00:24:09","modified_gmt":"2021-03-12T23:24:09","slug":"palantir-potential-controversial-rising-decacorn","status":"publish","type":"post","link":"https:\/\/www.simtrade.fr\/blog_simtrade\/palantir-potential-controversial-rising-decacorn\/","title":{"rendered":"Palantir: a potential and controversial rising decacorn"},"content":{"rendered":"

Palantir: a potential and controversial rising decacorn<\/h1>\n

\"Quentin<\/a><\/p>\n

This article written by Quentin Bonnefond<\/a> (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2020-2021) discusses the case of Palantir.<\/p>\n

Introduction<\/h2>\n

Founded in 2003 by entrepreneur Peter Thiel, Palantir provides software and data analysis services to help government agencies (CIA, NSA, etc.) and large corporations (among which Merck, Fiat-Chrysler, Ferrari, Cr\u00e9dit Suisse, Airbus, etc.) process large amounts of information. This discreet activity has led Palantir to be regularly accused of mass surveillance and criticized for its close links with law enforcement agencies.<\/p>\n

Palantir introduced in the NSYE\"BanqueSource : https:\/\/finance.yahoo.com\/<\/center><\/p>\n

Still no profits<\/h2>\n

Palantir is a real cash consumer. In 2019, its operations consumed $165 million in cash, or 22% of its revenues. And its cash consumption increased from the previous year. In 2018, Palantir’s negative cash flow from operations was $39 million, its cash consumption in 2019 soared by 323% while its revenues increased by only 25%.<\/p>\n

The company has very high overhead costs, which accounted for 105% of sales last year. This is due to high R&D costs and low selling prices compare to traditional consulting due to the lengths of its project (several years). To be competitive and acquire new clients, the firm needs to propose reasonable prices.<\/p>\n

In 2019, for example, Palantir’s sales and marketing expenses of $450 million accounted for 61% of sales, while general and administrative expenses of $321 million accounted for 44%.<\/p>\n

After 17 years of existence, Palantir still hasn’t figured out how to make a profit.<\/p>\n

The financial and health crisis: an opportunity not to be missed<\/h2>\n

The coronavirus crisis has created “enormous opportunities”. This phrase has prompted many funds to invest in the company. Moreover, at the end of January 2021, in a morose context of economic and health crisis, the Californian firm announced a partnership with IBM, which skyrocketed the share price to $39, which was 4 times its value at the time of its initial public offering (IPO), 4 months earlier.<\/p>\n

Source: https:\/\/fr.finance.yahoo.com\/quote\/PLTR\/<\/p>\n

A price correction<\/h2>\n

Uncertainty linked to the global health crisis smiles on Palantir, but the end of the crisis could be (slightly) more unfavorable for the firm. The US company says that revenue growth is expected to slow to about 30% in 2021, compared to 47% in 2020. This announcement is reflected in the share price: $26.75 at the market closing of 23\/02, a 31.41% drop in one month.<\/p>\n

The company reported better-than-expected sales in the fourth quarter and recorded more than $1.1 billion in annual revenues by winning 21 contracts worth $5 million or more.<\/p>\n

Insights:<\/p>\n