Palantir and Crypto

Palantir's steps into the crypto market

The software and data intelligence company Palantir wants to get involved in the crypto market. The interest in digital assets is no coincidence – company founder Peter Thiel is considered an outspoken crypto bull. 

For the data analysis company Palantir, the cryptocurrency market is a field of the future. With its product, the company wants to meet the demand of crypto companies.

"Foundry for Crypto" as a key business driver

The software offered under the name “Foundry” is to become one of the company’s growth areas. The platform is to be further driven by business customers in particular, the company hopes. During the recent financial statement presentation, Chief Operating Officer Shyam Sankar had made clear the ambitions in this segment: the new crypto software will be a “massive accelerator for crypto companies”, the company manager said.

With “Foundry for Crypto”, the data analysis company wants to offer “industrialised compliance solutions”. It will do so by leveraging its expertise in anti-money laundering and “know-your-customer for potential crypto-exposed customers”, it added in the financial statement release.

In October, Palantir added blockchain data analytics company Elementus to its Foundry for Builders programme, which gives start-ups access to flagship Foundry data intelligence software.

Core business disappoints

A glance at the balance sheet for the third quarter 2021 makes it apparent how important the plans in the crypto space and the growth hoped for with them are for Palantir. For even though the group had exceeded market expectations for the third quarter with a jump in revenue of 36 per cent to 392 million US dollars, a closer look shows that business with government customers grew a little less strongly than hoped. While revenues in the business client segment rose 37 per cent to US$148.6 million, exceeding expectations, the government client segment was below market estimates with a 34 per cent increase to US$218 million, up from US$235.9 million.

As a result of these developments, analyst Rishi Jaluria at RBC Capital had recently downgraded Palantir shares to “underperform”: “Government business is the most important part of Palantir’s business for us, and while we expected a slowdown, the growth rate was almost halved from Q2 to Q3,” he said in a report quoted by Investor’s Business Daily. “We also note that the value of government business increased by only seven per cent year-on-year. We believe that Palantir had direct benefits from COVID-related expenses and that these benefits have already waned,” the expert added.

Palantir with ambitious growth plans

Nevertheless, Palantir has formulated an ambitious growth target: Between 2021 and 2025, the company wants to increase its revenues by at least 30 per cent per year. In addition to the government and enterprise customer segment, the company is also focusing on the crypto business.

The key driver for this segment is likely to be company co-founder and philantropic billionnaire Peter Thiel, who is considered an outspoken crypto bull. As the largest shareholder of the data specialist, he is likely to have contributed significantly to the focus on the crypto segment. Only in May, Thiel founded the cryptocurrency trading platform Bullish Global together with some partners and recently saw the high prices of Bitcoin and co. as an indication of increasing inflation concerns.

Palantir also recently added Bitcoin to its balance sheet to hedge against unexpected market events. “You have to be prepared for a future with more black swans,” Shyam Sankar, head of day-to-day operations at Palantir, said in an interview. In addition, the data specialist also accepts bitcoin as a means of payment.

Palantir’s growth plans do not yet convince analysts. On average, experts rate the share as “underweight”, but the average price target of 23.38 US dollars is almost 18 per cent above the current market price. However, the Palantir share has already lost about 15 per cent of its value in the course of the year.

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