Palantir (NYSE:PLTR) came public in September 2020 amid much anticipation. How would CEO Alex Karp steer the company through controversy, high-dollar government contracts and Election Day? Investors did not need to worry. In fact, since Election Day, PLTR stock is up 150%. With Wall Street now convinced Palantir is heading for the moon, it is time to look at other surveillance and security plays. Where should you start? Future-focused investors should consider whether Knightscope is on the way to becoming the next Palantir.
Essentially, both companies believe that technology can solve issues of safety and security. Palantir offers platforms for data-driven decisions, and the company works with high-profile customers like the Greek government and the U.S. Food and Drug Administration. But most importantly, other customers have used Palantir software in issues of terrorism and child trafficking.
Instead of offering platforms for decision-making, Knightscope is hoping to combat security issues with its fleet of robots. In fact, Knightscope says its goal is to make the United States the safest country in the world. Can the company actually step in to fill the void left by security guards and law enforcement officers? And can investors really profit from this robotic endeavor?
If you think the company can, then it very well could be the next Palantir. That means ahead of an initial public offering, Knightscope represents the next PLTR stock.
What Exactly Is Knightscope?
Knightscope got its start in 2013 under the leadership of CEO William Li, who happens to be a former Ford (NYSE:F) executive. Fundamentally, the company believes that the U.S. is not safe enough. Instead of throwing money into traditional law enforcement endeavors, Knightscope thinks its fleets of autonomous robots can help solve the problem.
Right now, Knightscope has four models. The 150-pound K1 focuses on securitizing entrance and exit points, like in parking lots, buildings or shuttle stops. K3 bots promise to make malls and warehouses safer, while K5 bots do the same for stadiums and corporate campuses. The next-generation K7 looks like a cousin to Tesla (NASDAQ:TSLA) vehicles and promises to protect federal campuses, prisons and other rugged terrains. Investors should note that the K7 bot is still under development.
So how do these robots work? And what do they do? Essentially each of these robots, or autonomous data machines as Knightscope calls them, function in indoor and outdoor settings. They move autonomously thanks to a series of lasers and encoders. Each patrols a set area, collecting data, including livestreamed video. In terms of actual security solutions, the bots provide facial recognition, license plate recognition, thermal anomaly recognition and audio broadcasts.
According to Knightscope, these robots solve many of the current problems with crime and law enforcement in the U.S. Additionally, they also have racked up a series of accomplishments that include solving a hit and run and helping law enforcement issue warrants for sexual predators.
As you consider whether Knightscope is the next PLTR stock, know that the company sees itself playing a major role in efforts to reimagine public safety.
Can You Profit From Security Robots?
Autonomous, crime-fighting robots feel like something straight out of a science-fiction movie. Knightscope sees them as a very real — and profitable — part of the U.S. law enforcement story.
Right now, Knightscope details how there are about 500,000 security guards and law enforcement officers working at any one moment. These 500,000 individuals are working to protect nearly 330 million Americans. Plus, as the issue of police brutality highlights, human involvement in the public safety process is far from perfect. Knightscope thinks it can solve that.
As you evaluate whether or not you can profit from autonomous safety robots, there are two things to consider. The first is the actual track record of Knightscope. The company is the first and only business to operate a fully autonomous fleet nationwide 24/7. Its robots have already logged 1 million hours of service with paying clients, and has supported customers like Samsung (OTCMKTS:SSNLF) and XPO Logistics (NYSE:XPO). Lastly, a case study from the Huntington Park Police Department shows that Knightscope bots brought a 46% reduction in crime reports and a 27% increase in arrests.
The second thing to consider is the macroeconomic issue at hand. As Li tells it, crime has a negative economic impact of $1 trillion on the U.S. each year. Reducing crime would give so many areas of the economy a boost. It would improve insurance. It would benefit municipal budgets. Lastly, it could help the U.S. allocate its defense and security spending in a way that yields a higher return on investment.
With both of these considerations in mind, know that Knightscope operates with a machine-as-a-service business model. This means that Knightscope offers robots via hourly subscriptions that range from $4-$11. Over a five-year period, the company estimates per-robot profits of $250,000.
How Is Knightscope the Next PLTR Stock?
Still not sure how Knightscope could be the next PLTR stock? Hear me out.
Both companies believe that technology is critical in addressing issues of public safety. Recently, investors have chased up PLTR stock because of what it represents in terms of safety and security solutions. With the upcoming inauguration of President-elect Joe Biden, the thinking is that the U.S. Department of Defense may opt for its relatively lower-cost solutions. Additionally, as Biden puts pressure on China and works to combat Covid-19, there are many areas that could benefit from data.
Part of this interest in PLTR stock also stems from a fundamental understanding of public safety. According to statistics from the FBI, property and violent crimes have declined over the last 20 years. Despite that reality, many Americans feel more unsafe than ever. Similarly, many believe that the prevalence of violent crime is actually trending higher. While recognizing this, Knightscope also highlights the issues with current crime statistics. Agencies do not track all types of crime well. Some types of crime, such as sexual assault, are notoriously underreported. In fact, Knightscope goes so far as to suggest that the majority of crime is not reported.
Following that logic, investors see PLTR stock as a way to protect themselves and their portfolios from the scary world. Combine some security solutions with a sexy software business and you have a winning combination. Knightscope is looking to do the same, just with robots.
And, just as Palantir hopes to disrupt the existing three-letter agencies, Knightscope is looking to disrupt human law enforcement. If it can succeed, it could be the next Palantir.
Where Can You Invest in Knightscope?
So where can you invest in the next PLTR stock? Unfortunately for the average investor, Knightscope has yet to hit the New York Stock Exchange or the Nasdaq. However, thanks to regulatory changes with equity crowdfunding, you can purchase Knightscope stock via StartEngine.
As Li shared at a recent IPO Edge event, Knightscope has now raised $70 million from 17,000 investors. If you want to be a part of the story, you can still get in through StartEngine. On the crowdfunding platform, the minimum investment is $500.
If equity crowdfunding is not your thing, there may be some hope in the near future. As Li shared with IPO Edge, Knightscope is definitely planning on coming public. In fact, the company has reserved the ticker KSCP for when that day comes. While its plans are vague, Knightscope acknowledges that it is considering a traditional IPO, a direct listing and a reverse merger with a special purpose acquisition company. Now with 17,000 investors and four corporate backers, is 2021 the year that Knightscope will hit the public markets?
The Bottom Line
For fans of Palantir and PLTR stock, there is certainly a lot to like. Knightscope has continued to attract new customers, and even recently signed a deal with the Department of Veterans Affairs Police Department. With this contract, it now has its first federal-level agreement.
However, risks remain. Just as Knightscope calls out flaws with law enforcement officers and security guards, some critics have highlighted flaws with the robots. Knightscope came under fire in 2017 for a contract it had with the San Francisco branch of the Society for the Prevention of Cruelty to Animals (SPCA). According to various reports, the SPCA used these robots to deter homeless encampments from forming near its office. After all, robots are susceptible to the biases and values of the people who hire them.
Consider the ethical dilemmas, the investing proposition and the potential to mimic PLTR stock. At this point, ahead of a potential IPO, Knightscope is a company to watch.
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 with InvestorPlace.com.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks