Disclaimer: Please do not make investment decisions based on these newsletters. Also here’s a summary if you’re too lazy to read.
Summary
Right now, Palantir has become the favorite stock of r/wallstreetbets and is doing great.
The company is dedicated to working with government agencies to protect Western values around the world.
Activists think the company is evil for working with police departments and ICE.
Palantir CEO Alex Karp believes that policy decisions should be made by courts and voters, not for Silicon Valley.
Part of the reason Palantir has become a meme stock is because of its science-fiction aesthetic.
Palantir to the moon.
If you’re like me and you browse r/wallstreetbets when you’re bored, you might have noticed that the subreddit has a new favorite stock: Palantir. It’s interesting because just a few months ago, this was a company that pretty much nobody knew about. But now, the company’s stock is killing it. It went public at $7 back in September and it’s now trading at $23.
If you bought this stock back then, congrats. I wish I made that move. Anyway, let’s talk about what Palantir is and why the stock has become so popular.
What is Palantir?
Palantir was a company co-founded by former PayPal CEO Peter Thiel, who realized that the same software that was used to detect payment fraud from Russian gangsters could also be used to fight terrorism. On paper, Palantir was meant to help government agencies model and analyze data and prevent the next 9/11 from happening.
The company has been working with the government from the start. One of the company’s first outside investors was the CIA. Palantir’s platform was used to map out terrorist cells in Iraq and Afghanistan that soldiers previously had to draw out by hand. It’s also been rumored that the company’s software was used to help catch and kill Bin Laden.
But Palantir doesn’t just go and work with any government that wants to use its platform. The company’s mission is to give America and its allies the technology they need to win wars and protect Western democracy. It doesn’t sell its software to countries like China that are opposed to American interests.
On the other hand, Palantir does work with private companies. The same software that’s used to find terrorists can also be used by big businesses to spot unusual patterns in their datasets. For example, Chrysler uses Palantir to identify potential problems with their car parts.
In recent years, Palantir has done well in both the public and private sectors. In 2019, Palantir put up $742 million in revenue. But the company also faced one big problem: public perception.
Why people think Palantir is evil
Palantir’s work with the government has made the company pretty controversial. If you’re worried about law enforcement abusing power, you should probably be scared that cops have access to Palantir’s software.
Palantir helps law enforcement agencies collect information about suspects more easily than ever. Cops who use the company’s tools just have to type in the suspect’s name to find information like bank accounts and family relationships. By looking up their license plate number, they can get an idea of the suspect’s travel history. While some people probably would argue that it’s good for law enforcement to have the best technology available, it is scary to imagine a future authoritarian regime having access to this information.
Palantir also works with Immigration and Customs Enforcement, probably the most controversial government agency out there. The company’s tools have been used to catch and deport undocumented immigrants. Even when Palantir was hit with protests by both outsiders and its own employees about this, the company doubled down and renewed its contract with ICE.
Since most people who work in tech tend to be liberal, tech companies often refuse to do this kind of work. After the protests over police brutality this summer, Amazon put a one-year pause on letting police departments use its facial recognition tool. But Palantir isn’t a typical tech company.
Palantir’s CEO Alex Karp has said over and over in interviews that he doesn’t agree with everything the US government does. But he’s also said that these issues should be decided by voters and courts and not by a few engineers in Silicon Valley. So he refuses to cancel Palantir’s contracts and bow down to pressure from activists.
In a time when more and more people demand that companies take stands on social issues, that’s a controversial opinion. But the controversy hasn’t stopped Palantir from becoming popular with Robin Hood traders.
How did Palantir become a meme stock?
For reasons that nobody fully understands, certain stocks just become super popular with the youth and Internet culture. Tesla is probably the best example of this. While the company has a great product, Elon Musk has also spent a ton of time cultivating his public image with really stupid memes on Twitter.
That means for many kids who are just downloading Robin Hood for the first time, Tesla’s the first stock that they buy (I also did this when I first downloaded Robin Hood). Tesla’s popularity with retail investors is part of the reason why the company’s stock price has gone up by almost 800% in the past year.
So why is Palantir’s stock also so popular? There are definitely multiple reasons for this. One of them is that Palantir has a big opportunity because of COVID-19. The company’s software is going to be used to help set up vaccine distribution networks across America.
But I don’t think that’s the only reason why Palantir’s stock is going to the moon. We’re all human beings and we all make decisions for stupid reasons. It’s just like how Elon Musk’s tweets make him seem like a fun, relatable bro. The kind of data analytics that Palantir helps law enforcement do is the kind of shit you would see in movies like Minority Report. That makes it a cool stock to own.
That doesn’t mean that Palantir isn’t a solid company. All it means is that kids with Robin Hood accounts are probably more excited about owning Palantir stock than some Boomer company like AT&T.
In conclusion
Tensions with China are rising. Tech workers in Silicon Valley are becoming more activist than ever. More and more young people are downloading Robin Hood and trading stocks. I have no idea what the end game for all these trends is going to be. But Palantir is right in the middle of all of them, and right now the company is thriving.
Anyway, if you’re looking to learn more about business and tech, sign up for our weekly newsletter. We send one email on topics like this every Sunday.
How Palantir became a meme stock