George Soros buys a stake in big data firm Palantir

By Paul R. La Monica | CNN Business

Two heavy hitters of the investment world recently bought stakes in Palantir, the secretive and controversial big data firm backed by Peter Thiel that began trading on Wall Street in September.

Soros Fund Management, run by billionaire investor and philanthropist George Soros, and Third Point, the firm led by occasional activist investor Dan Loeb, both disclosed late Friday that they own shares of Palantir.

Soros Fund Management acquired 18.5 million shares of Palantir while Third Point took a more modest position of 2.4 million shares.

The Soros investment was worth about $175.3 million, according to a filing with the Securities and Exchange Commission. That works out to a purchase price of $9.50 a share. Palantir’s stock is currently trading at just under $16 a share, so the Soros stake is now valued at about $294 million.

Palantir went public through a direct listing of existing stock on the New York Stock Exchange. That means Palantir didn’t need to sell new shares through a more traditional initial public offering. It’s how Spotify and Slack also started trading on Wall Street.

Shares of Palantir have more than doubled from their so-called reference price of $7.25 a share on the day of the direct listing. Palantir is now worth nearly $30 billion.

The company, which has many governmental customers around the world, has been involved in helping track data about the spread of coronavirus as well as the potential distribution of vaccines.

But Palantir has also been controversial due to its relationships with government agencies and the vast trove of data it tracks. That has raised consumer privacy concerns.

The company’s Gotham, Foundry and Apollo platforms have been used to help monitor terrorist activity. Big businesses also use Palantir’s services to analyze data about weather patterns and consumer purchases.

Palantir was co-founded by Thiel, a venture capitalist who is known for being a member of the “PayPal mafia” that helped launch up the payments giant.

Thiel, who has more conservative political leanings, was also a backer of President Trump in 2016 and is currently a member of Facebook’s board of directors. This makes him a bit of an outlier in the predominantly Democratic-leaning Silicon Valley.

It also makes the Soros investment more interesting given that the investor is known for backing liberal causes.

Up until recently, little was known about Palantir’s finances. But before going public the company disclosed that while revenue is surging, it is not yet profitable.

That’s common for many so-called unicorns, private startups that command multi-billion dollar valuations. Palantir disclosed promising results for the third quarter last week, the first earnings report since the direct listing.

Palantir said that sales surged 52% to $289.2 million and raised its revenue outlook for the full year. The company also announced it won new contracts with the US Army and National Institutes of Health.

The company did lose a lot of money in the quarter — $853.3 million, in fact.

But Palantir noted that a big portion of its losses was due to $847 million in compensation expenses tied to the direct listing. Excluding that and other expenses tied to the Wall Street debut, Palantir reported a net profit of $73.1 million. Shares soared more than 8% on the news Friday.

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