- Shares of the big data company Palantir began trading on Wednesday via a direct listing.
- The New York Stock Exchange established a reference price of $7.25 per share, valuing the company at about $16 billion ahead of its official debut.
- Palantir has yet to become profitable, raising questions from investors.
- Palantir also has faced criticism from activists for its work with Immigration and Customs Enforcement, which the company has acknowledged poses a risk to its business — partially because yielding to the criticism might endanger its business with government clients.
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Palantir, the secretive and often-controversial big data company founded by Peter Thiel, made its public markets debut on Wednesday with a splash, as investors bid up shares and gave the company a roughly $19 billion market capitalization.
Shares of Palantir began trading on the New York Stock Exchange on Wednesday through a direct listing. The stock opened at $10 per share, 38% above the hypothetical “reference price” set by the company. Palantir shares rose 14% to $11.40 within the first hour of trading, but then lost momentum and dipped to as low as $9.77.
The reception on Wall Street is a vote of confidence in a company that has never turned a profit in its 17 years of existence, and whose business model has been viewed with skepticism by some observers. In its S-1, Palantir revealed nearly $580 million in losses in 2019, and it warned that it may never become profitable.
The company is known for its work with government agencies and law enforcement around the world, using its data analysis tools to track and prevent terrorism and other forms of crime.
Palantir acknowledged in its S-1 filing that criticism from “political and social activists” and “unfavorable coverage in the media” could pose risks to its business, but “being perceived as yielding” to activists’ concerns could also damage its relationships with government clients, its S-1 said.
Activists have also protested Amazon Web Services since Palantir hosts its data on that cloud. According to its S-1, Palantir could spend as much as $1.5 billion on cloud platforms including Amazon Web Services and Microsoft Azure over the next five-plus years.
Palantir is eschewing the traditional IPO process, instead opting for a direct listing, in which no new shares in the company are created or sold. This method of going public is an increasingly popular option in the tech industry — project-tracking tool Asana, which went public on Wednesday morning, also opted for a direct listing.
The New York Stock Exchange established a reference price of $7.25 per share for Palantir, valuing the company at about $16 billion. This is lower than the $20 billion valuation it fetched during a fundraising round in 2015. It’s not clear at what price it will debut on the markets, however. Palantir will trade under the ticker symbol PLTR.
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Disclosure: Palantir Technologies CEO Alexander Karp is a member of Axel Springer’s shareholder committee. Axel Springer owns Insider Inc, Business Insider’s parent company.