‘Big Data & Machine Learning’ is an exciting, emerging field. It promises to change our lives radically. More data has been created in the last two years than the entire history of humankind. For the standard Fortune 1000 company, just a 10% increase in data accessibility has resulted in an average revenue gain of U.S. $65 million. Just imagine the investment potential.
Article Outline: 1. Who is Palantir Technologies? 2. Why did the Company Make Headlines This Week? 3. Is Palantir Technologies Worth the Investment? 4. A Word of Warning
Who is Palantir Technologies?
Founded in 2003, Palantir is a private U.S. software company that specialises in big data analytics & machine learning. Originally, Palantir’s clients included domestic and international security agencies. Since then, the company has expanded its customer base to serve local & federal governments and companies in the financial & healthcare sector.
Some areas that the company notably specialises in include:
- Counter-Terrorism Analysis
- Fraud Analysis & Investigation
- Cyber Analytics
- Hedging & Financial Services
- Data Mining
- Knowledge Management
- Data Integration
- Quantitative Analytics
In 2019, Palantir Technologies posted revenue of U.S. $739 million and had a valuation of U.S. $41 billion.
Why did the Company Make Headlines This Week?
The investing community was overwhelmed with euphoria this week after company officials announced that Palantir would debut on U.S. markets as early as September. Palantir’s CEO, Alex Karp, confirmed this during an interview with HBO, “The company is deliberating between going public via a traditional IPO or a direct listing.”
This comes after many years where Karp refused to have the company floated. “Running a company like ours would be difficult and potentially corrosive from the inside.” (Karp, 2013). However, with the recent successful IPOs of DraftKings (NASDAQ: DKNG) & Nikola (NASDAQ: NKLA), “it makes sense to IPO now” according to Karp.
Is Palantir Technologies Worth the Investment?
Before I start, I am obliged to remind our viewers that this is not advice, only general commentary from my extensive research in this area.
Short answer: Yes, but timing will be critical (opinion not advice).
Investors need to remember that Palantir is still at least two months from an IPO. However, if the recent success of the NASDAQ is anything to go off, Palantir is set to soar on debut.
Thus, if I were to invest in Palantir, I would board the train and ride the trend for the first 1-3 weeks before pulling out with a nice capital gain. However, investors must be across critical global developments. Weak economic data, U.S. – China relations and COVID-19 events have the potential to cause a severe market correction (opinion not advice).
In the event that all doesn’t go to plan, I would hold my shares for the long-term. Naturally, the stock will rise as the global economy starts to recover. Moreover, the endless applications of big data will produce some excellent sell-off points for investors. Any announcements on acquisitions, strategic partnerships or the publication of pleasing financials are likely to catapult the stock into the stratosphere.
Remember, regardless if you have incurred a paper loss, you only lose money on the stock market when you choose to sell below your initial entry point.
A Word of Caution
Personally, I am excited by the potential of big data & machine learning. From improving customer service to detecting fraud to saving lives, big data has the potential to revolutionise society. However, if used for the wrong reasons, it has the potential to cripple our planet.
Look no further then what happened at Cambridge Analytics. It is alleged that the company misused U.S. Census data to collude in the 2016 U.S. Presidential election and practised cyber-terrorism. While no final court ruling was ever made, the negative PR that the company received drove them out of business. Thus, all stakeholders must be aware of any developments and tread lightly surrounding the use of big data.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Sergeo Domtchenko, Associate of YIG.