Palantir valued at $23 billion as shares pop in public market debut

(Reuters) – Shares of Palantir Technologies Inc PLTR.N, the U.S. data analytics firm known for its work with the Central Intelligence Agency and other government agencies, rose 48% on its public market debut on Wednesday, valuing the company at more than $23 billion.

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The listing is a landmark moment for Palantir, putting an end to years of speculation about when the company, co-founded by billionaire Peter Thiel in 2003, would go public and how much it would be worth.

Palantir’s shares opened at $10 and rose to around $10.70, up from the reference price of $7.25 set by the New York Stock Exchange on Tuesday. The shares traded at a peak of $11 in the private market in September and at a weighted average price of $9.17.

The listing lifts Palantir’s valuation above the $20 billion the company was valued in a 2015 private fundraising round.

There has been considerable conjecture about how much Palantir is worth and whether investors will view it as a lucrative software provider or a less-glamorous consulting business.

Denver-based Palantir went public at a time of strong investor demand for new stocks, particularly technology companies that promise rapid growth.

The company, led by CEO Alex Karp, has seen strong demand for its services, with revenue rising almost 50% to $481.2 million in the first six months of 2020 from the comparable period a year earlier. However, Palantir has yet to turn a profit in its 17 years of existence, posting a net loss of $164.7 million in the same period, compared with a loss of $280.5 million a year earlier.

DIRECT ROUTE

Palantir opted to go public through a direct listing rather than a traditional initial public offering, meaning it did not raise any money but allowed its investors to sell more shares.

Only two major companies – workplace messaging platform Slack Technologies Inc WORK.N in 2019 and music-streaming service Spotify Technology SA SPOT.N in 2018 – have taken the direct listing route.

Workplace software maker Asana Inc ASAN.N also went public on Wednesday through a direct listing, and its shares opened up 29%.

“Direct listings provide more open and equal access to shares and ensures market-based pricing,” said Michael Underhill, chief investment officer for Capital Innovations.

Palantir analyzes large amounts of data for U.S. government defense and intelligence agencies, global banks and energy companies. Its platform is used in some of the most politically sensitive projects, including tracking illegal immigrants and identifying terrorists. The U.S. military reportedly used Palantir’s technology to successfully search for al-Qaeda leader Osama Bin Laden.

As a public company, Palantir is expected to face intense scrutiny from investors and the media about its operations after years of being viewed as one of the most reclusive U.S. tech companies.

Palantir, whose name is derived from a magical artifact from hit movie “Lord of the Rings,” recently moved its headquarters from Silicon Valley to Denver, saying in a filing that it shared “fewer and fewer of the technology’s sector’s values and commitments.”

Morgan Stanley, Credit Suisse Group AG and Goldman Sachs & Co were the lead banks advising Palantir on its listing.

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