Risky heights
Palantir's dark twisted fantasy
Good morning, diligent data analysts. This is your Stock Market Rundown for November 15th, 2024. Thanks for plugging in today. Let’s dive in:
TODAY’S TOP STORY: LORDS OF DATA
In J.R.R. Tolkien’s epic fantasy The Lord of The Rings, the Palantíri are mystical seeing-stones, crafted by the Elves of Valinor. I know, this is some serious nerd stuff, but stay with me.
In 2003, billionaire Peter Thiel, who’d previously founded PayPal, cooked up a brand-new business idea: develop software that could help government agencies and big corporations analyze massive data sets, to help make critical decisions.
He named the business Palantir—inspired by the Palantíri and their visions of distant lands. The CIA was the company’s first customer, and an early investor. The big-data business boomed, and in 2020, Palantir went public on the New York Stock Exchange.
During the COVID pandemic, Palantir built the data platform the US government used to track case numbers. And the company is at the front lines of the war on terrorism: it’s rumored to have helped the US military pinpoint the location of Osama bin Laden.
Most of Palantir’s work is for governments—think three-letter agencies like the NSA, FBI, and CDC. But it also earns millions from corporate clients like BP, Merck, and Home Depot.
For Palantir, the AI megatrend has been like finding the One Ring—unlocking immense power. The company’s most recent quarter trounced analysts expectations, with revenues surging 30%. CEO Alex Karp boasted that Palantir is a “juggernaut”. Investors agreed, sending the stock to record highs.
But has the Palantir buzz gone overboard? Its stock has gone up so much, its valuation is now on par with that of defense giant Lockheed Martin—which has 25 times more revenue. That has analysts worrying that, if the AI hype fades, Palantir’s stock price could take a dive into Mount Doom.
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SO WHAT ELSE IS GOING ON?
Weight loss drugs have been a bonanza for pharma companies over the past few years. Problem: turns out they don’t reduce healthcare costs. Don’t count on your health insurance to pony up when you want to lose 10 pounds before your high-school reunion.
The massive US deficit is weighing on its credit rating. If America were a person, it’d be a deadbeat dad with three delinquent credit cards and a Camaro that’s about to be repossessed.
Top AI firm Perplexity is being attacked by media organizations—including Dow Jones and the New York Post—for using their copyrighted content in training its models. Getting sued by the mainstream media for reading its articles is like getting fined for overhearing gossip on the bus.
The CEO of Microsoft, Satya Nadella, will pull down $73 million of total compensation in 2024. Before you argue he’s not worth it, try building a financial model using a Mac.
That’s it for this week, pals. Don’t do anything I wouldn’t do this weekend, and I’ll catch you on the flip side. Yours in capitalism, The Axe