For people who are unclear what Palantir actually does
Palantir is a tech platform that consumes data from their clients in return for providing high level data-driven insights. They assign FDEs (or consultants) to really learn the details of a customers data. Foundry allows them to get single pane view of the data in an org and they actually have both the tech and engineering skills to do the dirty data cleaning jobs.
For an extravagant fee, you give them your data, they clean it for you, and then those same FDEs can tell you interesting things that you should have known, had you actually done proper data architecture in the first place.
Does it add value, yes. Is the value worth the fee? Like snowflake, they throw some very very good parties.
I'll throw the British South Sea Trading Company into the ring for that title of most overvalued company ever.
It had the king himself on the board. The company value represented a decent fraction of the national gdp at the time. All without actually never producing anything of actual value. It was just bribes and speculation all the way through. It's wild.
The Wikipedia user based his drawing off of this sculpture from 1711, so it seems the american continent was actually already quite well mapped back then.
The armorials of the South Sea Company, according to a grant of arms dated 31 October 1711, were: Azure, a globe whereon are represented the Straits of Magellan and Cape Horn all proper and in sinister chief point two herrings haurient in saltire argent crowned or, in a canton the united arms of Great Britain. Crest: A ship of three masts in full sail. Supporters, dexter: The emblematic figure of Britannia, with the shield, lance etc all proper; sinister: A fisherman completely clothed, with cap boots fishing net etc and in his hand a string of fish, all proper.[61]
The artifact you link shows a map of the Americas in which California is an island and either Tierra Del Fuego is huge or the bottom of Argentina is an island and the northwest of the continent trails off into nothing, and Florida is sort of a stubby nub (other maps from this period show a more accurate Florida, so this might be a small-size-of-the-object problem).
They had a decent view onto the east coast of the Americas, but after that things got quite inaccurate. It's like... I don't know what anyone's expectations are, but it certainly isn't the perfect world map that's shown in the main image of Wikipedia's article.
We should stop comparing incomparable things, like companies market cap (measured in dollars or pounds) to national GDPs (measured in dollars or pounds per year,) unless we want to reach outrageous but incorrect conclusions.
It's a dubious comparison but not because of "per year". The comparison is implicitly to one year's worth of GDP, which is a currency amount.
It's dubious because whereas a year's worth of GDP has some claim to actually being the value of something (with many caveats but it's engineered to behave like that as much as possible), market cap isn't. It's the amount all the shares would cost if someone bought them all in one go for the price some shares were most recently purchased for, which would never happen.
Hashicorp was bought for $35 per share at a time when it was trading a little above $25. Not saying crazy market caps aren't a sign of a bubble (not sure how you'd read that in my comment), just that market cap is not the value of the company.
Variation in price doesn't prove that the market cap is not (a good estimate of) the company value for highly liquid stocks.
Value is subjective. Stock prices measure peoples perception of the value. Your thesis that it is incorrect can only come from 2 places (I think)
1. Dumb money - the market cant see that XYZ is overvalued or undervalued. My rebutal there is nonetheless XYZ has been valued by a conpletely open continuous auction that people are not restricted to participate in.
2. The parts are less than their sum. This may be somewhat true... total control over a company may be more (or less) valuable than splitting. But I dont think it is order of magnitude. And if it is, it is because the value to you isnt the value to me (the value of RAM to a gamer < value of RAM to OpenAI).
Well, based on that last share purchase, we have incontrovertible proof that there was indeed one person in history who thought it was worth 3x GPD.
And the fact that in the entire BSSTC shareholder universe, there wasn't any noticeable volume for a sell, or a registered sell limit, at a lower value leading up to the last peak.
That must have been a rough trade, but someone got something out at the last moment.
1. No, we don't have proof that there was one person who thought it was worth 3x GDP. We have proof that there was one person who thought a 0.001% share of the company was worth 0.003% of GDP or whatever. They could think it was worth that much for plenty of reasons; maybe they thought the share price would grow for a bit more before collapsing so that they could make some profit, maybe they invested in order to just be an investor and have a say in investor meetings or however things worked back then. Maybe it was a status thing.
2. Why are we using the opinion of one random person to determine the value of a company
To add to this, this type of thing happens all the time in crypto.
A coin will release 1/1000000000th of it's eventual supply, have some trades at 10c and then claim the value of the entire supply as the headline value.
It is effective but wrong. It is the same as to compare a river flow to dam volume. There is a relation, but does not mean anything.
A better comparison is to compare somebody's net value to the total housing value of a city. For instance comparing Musk's net value to the total value of all the houses/apartments in New York. Or the the value of the gold in Fort Knox.
That makes no sense. House price/salary is used to compare payment periods or affordability. The context is important. Share value and GDP are totally different things and there is no direct relationship.
What’s the issue? If a market cap is three times an annual GDP, it means it would take three years of that economy’s entire production to purchase the company. It’s obviously a very fuzzy measure for various reasons, but it can give some idea of the market value of a company.
The reason Palantir is valued as highly is because it is a Peter Thiel company, and he also owns the Vice President of the United States.
The thesis is "The current US administration is making enormous profits from their powerful positions. Whether of not I agree with this, I want some of that money too".
I'm not sure why this isn't mentioned because it's the number one factor driving the price.
And then you have Thiel going crazy about biblical end times prophecies involving the anti-christ and I'm starting to wonder wtf they're doing at Palantir.
It is pretty clearly labelled with "(Sponsor)". Couldn't be less obtrusive, either. I think on balance it's at least neutral compared with the other nonsense available to both the publisher and advertiser these days.
It seems like the financial outlet made a maths error and then was amazed by the absurdity of the incorrect result they got.
Specifically their whole outrage is based on having accidentally calculated what would need to happen for Palantir's revenues to grow 1500x as opposed to 15x. The corrected statistic would be the Palantir requires 11.4% revenue growth year over year not 35%.
90% of TSLA income is from EV sales. Everything else is just Musk's grandiose and increasingly absurd predictions which have a long history of falling short of reality.
Yes. Most companies play these financial games to some extent.
I lumped government subsidies in with EV sales since they are related. Trump wiped these out.
Robotaxi and robots are the fantasy category. They are not currently income producers and may not be for years to come. His robot demos have been widely panned as fake.
To me it would depend a lot on how US/EU relations continue to grow/break. If digital sovereignty ends up putting Palantir in a position where they won't be able to seel their intelligence tools to European secret police organisations, then it's probably overvalued. If relationships work out fine, then they'll basically be the Microsoft of mass survailance, which may make them overvalued but surely not the most overvalued company that ever existed?
Once you’re embedded in govt, the ‘OS’ for government, then you can raise charges in order to keep the hoards at bay. Hoards that are angry at cuts to public services made in order to finance Palantir profits…
What 4/5yr term govt can turn off or replace their OS?
I do not think the EU is critical. Palantir's potential market is global, so one region is not that important to them. They also sell to the private sector and this will increase, and EU countries will have different policies so losing a few EU governments business would not be that big a deal.
Right now 73% or their sales are to the US, and the next biggest source of revenue is the UK, far behind at 10%. The whole of the rest of the world, including the EU, adds up to 17%.
Would you trust China? it has an incomparably worse record than the US.
A lot of the biggest potential markets are in Asia, and almost all Asia countries fear China, and to many of them it is their main potential military threat.
IMO the best interests of either of the two countries of which i am a citizen would be to be less dependant on the US, however the US is nothing like the threat China presents.
Edit: to add, they are competing with whatever equivalent product China has to sell anyway.
For the Mexico example, China isn't the neighboring USA whose president out of nowhere started talking about taking over it's only other neighbor, or government overthrow in Venezuela. Or the recent attempts to sway elections in other central American countries, pardoning of convicted drug dealing ex-Presidents. Attacks on Columbia's government. Sweetheart deals with central American dictators to illegally house immigration deporties in sub-human conditions with zero due process.
It isn't. It's just that they're doing it where others aren't. They're a child of Total Information Awareness that has never realized or just doesn't care about the societal poison pill inherent to it.
The magic sauce in terms of bubbleability is that the product is all secret and investors can't form any natural opinion beyond what's published in company performance publications. Because they aren't allowed to know anything beyond that. It's just blind trust, "governments have bought before, they might continue buying, perhaps buy more". Reminds me a bit of the psychological mechanisms that make a con work, might be something to it.
There's a few things. Let's start with the core of what they say is their value. They have forward deployed engineers - this a totally new, previously unknown innovation - who go to a company, understand their needs and build data processing tools to give them insights. Then, they generalize these tools so that they can essentially sell them as SAAS software, giving them SAAS-type economics.
What other people say is their secret sauce, is they do consulting work for the government (a forward deployed engineer is just a consultant) and they make incredible margins because their senior management and early investors have connections to the government which gets them exclusive access to incredibly juicy contracts. As these contracts paid off they leant heavily into the social media meme stock trend so their CEO spends time talking like a psychopath and doing various non-economic things like spending huge amounts of money running adverts about how they're going to use AI to unleash Americas workers (America's workers aren't able to buy Palantir software or services, but they can buy it's stock).
OK. The first part sounds a bit like an innovation.
I was kind of expecting someone to say it had EG really sophisticated ETL tools that can normalise loads of different data or can query across disparate data sources or something.
The first part sounds like a basic ERP implementation. Only instead of leaning on your in-house domain experts who have years of experience/relevant knowledge/know the relevant caveats, you pay consulting rates to train up new domain experts who don't understand/know the caveats and who will charge you consulting rates to gain access to the results of the training you overpaid for.
'But they cleaned the data up'. That data was also cleaned up during all the last major system updates. And during the implementation of those systems. And the implementation of the systems before that.
P/E isn't the only way to value a company. A company can be unprofitable, and therefore not have a P/E, and still be worth something. A quickly growing startup that is losing money on paper but has free positive cash flow is one example.
Well, Palantir is the only really large company in the P/E top section. You could argue smaller companies have more upside and could thus justify their valuation easier
>Palantir would need to grow its revenues roughly 15-fold (yes, 1,500%) over the next quarter century, implying sustained annual revenue growth in the 35% range over this time frame.
That's actually a pretty reasonnable ask for a tech company, if you believe Palantir can grow to the level of FAANG.
Sustained growth of 35% p/y over a _quarter of a century_ is not a 'reasonable' ask, tech company or no tech company. Virtually no company has ever done that.
One of the concerns with the company though is are they really “software.” Many cite experiences with the where they deploy armies of people doing things to clean up data and other hands on labor for the “software” to work just “software” where you buy a license and off you go.
For the sake of democracy and freedom of human expression, I hope that their software is a bloated, bureaucratic mess and can’t power the efficient dystopia which Alex Karp wants.
No. Thats the point. There nothing groundbreaking except their branding and lobby. Every other enterprise sofware company has data analytics platforms similar to Palantir - including the big microsoft / google. Palantir might even be best by a big margin but none of that matters. Nothing would justify this valuation. But what matters is that govs around the world will buy Palantir to show their alliance to US/Trump/Thiel. European far right politicians will happily push Palantir everywhere.
Like Tesla, Palantir is an ideological investment for many, and likely why it's so over valued. Retail investors buy these stocks because they're buying into a world view. Tesla's is obvious (and it's not about green investments). Palantir's is a little less so, but they have built up an image that's right wing (but mostly not culture war), military-coded, and layered on American exceptionalism. They sell to the CIA, they sell to ICE, they help private healthcare companies milk their customers. This is all part of a world view that many people are in favour of, and Palantir represents it well. Andruil will likely do well for similar reasons once they go public.
This is not really to fault them. I see the company as far more mature than Tesla. They've cultivated a brand that works well for them. This is also not intended to be a criticism of Palantir investors, there are many reasons to invest, and even if you subscribe to the above that is of course your right! Many people invest for ideological reasons, myself included, and that's fine.
> Many people invest for ideological reasons, myself included, and that's fine.
It's fine if you don't mind losing your shirt.
For us normal people, we invest to try and grow the money we've saved for the future (in my case, for my retirement), so investing in a company whose stock is insanely overvalued is a great way to blow up my pension pot.
I don't understand the rationale behind "investing for ideological reasons", can you explain it?
Investment for ideological reasons is basically "I like what this company is doing and want to see it succeed/want to make my returns on investment via it", and that investment helps it succeed, to at least some degree. You also get the opposite: "I don't like what this company is doing and don't want it to succeed/don't want to make money from this activity, so I won't invest in it". ESG investments were largely built up from this (much as they generally turned into box-ticking exercises as opposed to a useful distinction). Of course this is generally going to make less money than "I just want to make money/predict winners in the marketplace", but that's not everything people want to do with their money.
The difference being not investing in something for ideological reasons won’t jeopardise your assets; whereas YOLOing your 401k on Palantir because “AI surveillance capitalism is dope lol” is potentially risking significant portions of your future.
Can’t people just retweet Karp on X if they want to “support Palantir ideologically”?
Depends how you do it (I wouldn't put everything in one company no matter how much I liked them), but having money to invest does represent some power over the world so I understand people exercising it (though not why someone would choose Palantir).
GME is not the same thing: while I think there are some true believers in the company itself (and this is part of what drove the initial interest in it), for the most part interest in modern meme stocks is driven by the polar opposite: a kind of financial nihilism that believes hype and gambling on popularity is the only thing left in the public stock market, and they're basically just trying to ride the wave of a crowdsourced pump-and-dump and fleece others via selling to greater fools (and/or creating a cult around a mythical short-squeeze that is reaching ever more fanciful heights).
> Many people invest for ideological reasons, myself included, and that's fine.
Sure, but I'm under the assumption that many people, yourself included, are conflating "buying some company stocks" with "investing".
To first order approximation, it does not benefit a company that you trade stocks on the market once they have been emitted, any more than it benefits GM if you opt to buy a second hand chevrolet.
If they keep their shit together and ride the surveillance wave then I don't see what should keep them from increasing 15fold by 2050. Their technology is not at all dependent on AGI, which is why I don't understand why they are always thrown in together with OpenAI et al.
it may well be terrible software, but Palantir are effectively an arm of the new Trumpian state, so guaranteed access (and ownership?) to the largest public sector projects of the largest economy in the world. It's got a good chance of becoming the Samsung of the US, so any value is not an overvalue
Ridiculous statement. If you're actually investing your money in a company then you need to run the numbers, it's the most basic kind of due diligence you should do.
Palantir is a tech platform that consumes data from their clients in return for providing high level data-driven insights. They assign FDEs (or consultants) to really learn the details of a customers data. Foundry allows them to get single pane view of the data in an org and they actually have both the tech and engineering skills to do the dirty data cleaning jobs.
For an extravagant fee, you give them your data, they clean it for you, and then those same FDEs can tell you interesting things that you should have known, had you actually done proper data architecture in the first place.
Does it add value, yes. Is the value worth the fee? Like snowflake, they throw some very very good parties.
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