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Know Why You’re Buying (Or Not Buying) Palantir Technologies

Palantir Technologies (NYSE:PLTR) is one of many companies that began trading publicly in 2020. In early October, PLTR stock made its debut via a direct listing. But it was only until after the election that the stock made a significant move from its initial public offering (IPO) price of $9.50, up to almost $16 now. Should this increase change the narrative on the controversial Big Data mining company?

Palantir Technologies (PLTR) headquarters
Source: Sundry Photography /

To the uninformed, Palantir would seem like a logical investment. After all, Big Data is one of the most investable ideas of this decade. For better or worse, companies are competing to gather more and more customer data. And of course, that creates the need to glean meaningful insights from the information. That’s where Palantir comes in.

Despite it filling a need, though, Palantir is an extremely controversial company. That’s because it’s involved in all those things about our government that we’d rather not know. For example, one of the company’s earliest investors was the Central Intelligence Agency (CIA). In fact, the company has been credited for helping locate Osama Bin Laden.

More recently, Palantir has received contracts from local police forces as well as the U.S. Immigration and Customs Enforcement (ICE). These two items alone have put the company at odds with many people — including it’s own employees and, presumably, the incoming administration.

That has made Palantir enemy number one among the progressive set. But when deciding on whether to invest in PLTR stock, you should forget the notion that President-elect Joe Biden will avoid Palantir altogether.

PLTR Stock and Equal Opportunity Surveillance

We’ve heard enough “no red state, no blue state” rhetoric to last a lifetime. But in the case of Palantir, they mean it. Keep in mind, the company has been around since 2003 — it cut its teeth at a time when the nation’s need for intelligence was extremely high. But while the company’s consulting services diminished during the Barrack Obama administration, it didn’t go away entirely.

And that makes sense. There is a lot of attention given to co-founder Peter Thiel’s close ties to President Donald Trump. However, the company’s CEO Alex Karp was also an ardent backer of Hillary Clinton.

Then there’s Avril Haines. A former deputy director of the CIA during the Obama administration, Haines was tapped by Biden’s team to be a foreign policy advisor. However, shortly after joining the team in June, Haines removed a reference to her consulting work for Palantir. One would postulate that Haines has reasonably intimate knowledge of the company’s capabilities. And that would be an asset to the Biden administration.

What I’m saying is this: Palantir is not going away just because a new administration is in charge. It may not be asked to do the same things it did for Trump. But the “beltway bandit” — as InvestorPlace contributor Mark Hake describes it — will still be around.

Big Data Has Many Applications

For all of the focus on the covert side of the company, what some have missed is that Palantir also draws a significant amount of revenue from private clients. Controversial government deals aside, that strengthens the case for PLTR stock.

For example, Credit Suisse (NYSE:CS) uses Palantir’s software to guard against money laundering. Likewise, German pharmaceutical company Merck (NYSE:MRK) uses Palantir to make its new drug development more efficient. Ferrari (NYSE:RACE) even uses the company to make its Formula 1 cars faster.

What’s more, in 2020, the company was able to make a fast, efficient pivot to be part of the response to the Covid-19 pandemic. In fact, Palantir technology has even monitored Covid-19 internationally, helping countries track and contain the virus.

What to Do With Palantir?

There may be many reasons not to invest in PLTR stock. One of the most compelling arguments for me actually came from Mark Hake. He referenced his time in the government as background to why investors may want to wait until they get a little (or a lot) more transparency from the company.

On top of that, you can look at the fact that Palantir’s products appear to have a mixed track record of success. There seems to be two camps forming — true believers and others who say the product is lacking.

But — if you’re going to object to the stock based on its recent government work — you should consider that saying about throwing stones in glass houses. When it comes to wading into controversial issues, Palantir has been an equal opportunist on both sides of the aisle.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

Article printed from InvestorPlace Media,

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