Peter Thiel’s secretive Palantir Technologies tech firm registers for Wall Street listing

The notoriously secretive tech firm founded by former Trump supporter Peter Thiel registered on Tuesday to list on Wall Street, as the company’s CEO railed against Silicon Valley in a letter to his investors.

Palantir Technologies works with governments, law enforcement agencies and the defense establishment to organize and analyze huge volumes of data. 

The technology can be used to disrupt terrorist networks or battle human trafficking. Most recently, it was used by the White House to track coronavirus infections. Last year, Palantir won Army contracts potentially worth hundreds of millions of dollars.

But the company has stirred controversy for upgrading Immigration and Customs Enforcement software used to track subjects for deportation. That led to on-campus campaigns to discourage recruitment and the picketing of CEO Alex Karp’s home.  

The Wall Street listing had been expected for some time, but the registration documents for the public stock listing on the New York Stock Exchange provide one of the first comprehensive looks at the company’s inner financial workings.

Palantir, like Spotify and Slack before it, is opting for a direct listing route. 

A direct listing would allow the company’s current shareholders, including investors and employees, to sell stock on the first day of trading, without the lockup period of an IPO.

Unlike an IPO, however, the company would not issue new shares for the offering – but the method avoids the hefty fees charged by underwriters in an IPO. 

No capital will be raised through Palantir’s listing.

Palantir’s prospectus reveals 2019 revenues of $742.6 million, up 25 per cent from the prior year, and net losses of $579.6 million. 

That loss has already shrunk to $167.6 million in the first half of 2020, the company said. 

As recently as April, the company expected to hit $1 billion in revenue this year, Bloomberg reported.

The prospectus, obtained by Business Insider, paints a rosy prospect for the 17-year-old firm.

‘The broader momentum of our business is the result of the strength of our software platforms and the need for software that works has never been greater,’ the company say.

The prospectus also reveals high compensation for Palantir’s three executives. 

Co-founder and CEO Alexander Karp took home more than $12 million in salary and stock options last year, while President Steve Cohen and COO Shyam Sankar received roughly $16 million and $26 million, respectively.

A special multi-class stock structure means that Palantir’s founders will keep a tight grip on the firm, with at least 49.99999 per cent of the voting power so long as they maintain a certain level of ownership in the company.

In July, Palantir confirmed it had confidentially filed the paperwork with the Securities and Exchange Commission to begin the listing process. 

The company also moved its headquarters from Palo Alto, California to Denver, Colorado ahead of the listing.

Karp, in a letter accompanying Tuesday’s filing, kicked Silicon Valley on his way out. 

‘Our company was founded in Silicon Valley, but we seem to share fewer and fewer of the technology sector’s values and commitments,’ he wrote.

He accused the elites of Palo Alto of being out of touch with the real world, and of having warped priorities. 

‘The engineering elite of Silicon Valley may know more than most about building software. But they do not know more about how society should be organized or what justice requires,’ he wrote.

Karp said that many of Palantir’s neighbors in the tech hub were skeptical about helping their government when asked for data, yet happy to sell the same data to advertisers. 

He said Palantir has ‘repeatedly turned down opportunities to sell, collect, or mine data,’ contrasting it with consumer companies ‘built on advertising dollars.’

‘Software projects with our nation’s defense and intelligence agencies, whose missions are to keep us safe, have become controversial, while companies built on advertising dollars are commonplace,’ he wrote. 

‘For many consumer internet companies, our thoughts and inclinations, behaviors and browsing habits, are the product for sale. 

‘The slogans and marketing of many of the Valley’s largest technology firms attempt to obscure this simple fact.’  

Cofounded in 2003 by Facebook board member Peter Thiel, Palantir has grown into one of the most valuable startups in the country, with $2.75 billion in venture capital raised and valuations as high as $20 billion. 

Karp, Thiel’s Stanford Law School classmate, has served as chief executive since 2004.

The company’s clients include US government agencies like the FBI, CIA, and Department of Defense, as well as law enforcement agencies around the world. 

Many of those connections, including dealings with ICE, have come under intense scrutiny in recent years.

Thiel, a venture capitalist who made his fortune as co-founder of PayPal, was one of the few tech leaders to publicly back Trump in 2016, donating $1.25million to his campaign and describing him as the man who could rebuild America during the Republican National Convention.   

Despite publicly stating in 2018 that he supports Trump’s bid for another term in the White House, Thiel has remained largely silent throughout the current election cycle, without donating a single cent to the president’s campaign.

It’s now emerged that Thiel has expressed concerns over Trump’s re-election prospects in conversations with friends and associates at his oceanfront home in Hawaii in recent weeks.

Sources told the Wall Street Journal that Thiel believes the US economy will likely be stuck in deep recession with double-digit unemployment when the election rolls around in November – one that would put any sitting president at a dire disadvantage to a challenger.

Yet that has not detracted from Palantir’s courting of government business. 

Those government contracts, along with commercial clients, make up a total addressable market of $119 billion, Palantir said.

‘The challenges that we face, and the crises that we have and will continue to confront, expose the systemic weaknesses of the institutions on which we depend,’ Palantir said. 

‘Our industrial infrastructure and manufacturing supply chains were conceived of and constructed in a different century. Government agencies have faltered in fulfilling their mandates and serving the public. Some institutions will struggle to survive. Others will collapse.’

Palantir gets its name from J.R.R. Tollkien’s Lord of the Rings saga. A palantír is a magical artifact in Middle-earth that is used for communication and to see events in the past and future.