Palantir (NYSE:PLTR) has been the subject of investor interest, controversial headlines and political drama since long before it came public. Today, it once again finds itself surging higher, up almost 12% in intraday trading. But without any news from the company, why is PLTR stock on the move? And why should investors pay close attention here?
To really answer that question, investors should consider exactly what Palantir is all about. At a quick glance, the company says it is a software firm that specializes in Big Data analytics. That alone is interesting, as many in the stock market have been relying on software names to power them through the novel coronavirus slump. However, that surface-level description does not really encapsulate PLTR stock. In fact, Palantir counts the U.S. Department of Defense as one of its largest customers. Why?
Well, behind its Big Data analytics solutions is the reality that Palantir specializes in all things law enforcement and surveillance. That is also exactly why it is controversial.
Leading up to its IPO, and then ultimately through Election Day, investors were not sure how to approach PLTR stock. There was a good reason to believe it had a successful business and big potential, but it was shrouded in controversy. Founder Peter Thiel is a longtime supporter of President Donald Trump. Current CEO Alex Karp has also come under fire for criticizing Silicon Valley, refusing to cut company ties with the federal government. Perhaps even more controversial is the fact that Palantir has supported the CIA and U.S. Immigration and Customs Enforcement.
With all of this in mind, why is PLTR stock surging higher today? And why has it gained nearly 90% since Election Day? It seems that Palantir would struggle with President-elect Joe Biden headed for the White House.
Why PLTR Stock Is Really Surging
It appears that PLTR stock bulls are actually excited that Biden won the presidential race. This gives Palantir the chance to break away from Trump and his controversial administration. Importantly, it also gives the company a chance to align itself with a more stable government. Think about it.
Investors have already been cheering on his cabinet picks, largely assuming it will make for a stable four years. Just yesterday, the announcement that former Federal Reserve Chair Janet Yellen would be Treasury Secretary helped boost the Dow Jones Industrial Average above 30,000 for the first time ever.
There is also one more catalyst at play here. With Biden in office, the Department of Defense could see its overall budget come down. Although that may be bad for some of the more traditional security plays, it could be a major driver for PLTR stock. How? As Jeran Wittenstein and Lizette Chapman wrote recently for Bloomberg, software from Palantir is typically cheaper.
This means with Biden in office and with lower budgets, Palantir could see even more demand from one of its largest customers. With that in mind, the post-election rally keeps taking PLTR stock to new heights.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.