Thread by @OwlWealthy

Thread on $PLTR
@DominicRinaldi9 @Mayhem4Markets
@sachinvats

(1)Palantir used for BIG things: building safer cars, preventing money laundering, fighting hunger, lower carbon energy, accelerating cancer research. US military uses PLTR to plan and execute missions

(2) thesis for #PLTR - U either believe they have best s/ware 4 helping companies understand, decide & act on ever-growing treasure trove of data; or not. And, value $PLTR able to extract from messiness of co's data so important co's will pay headline grabbing sums of 💰

(3) Origin story

$PLTR founded to help 🇺🇲 government fight terrorism post 9/11, w/out infringing on civil liberties. Peter Thiel, Paypal co-founder had idea to use data driven methodology to help 🇺🇲 prevent terrorism. He tasked former law school roommate Alex Karp to be CEO

(4) Since 1st government customer, problem of helping org's integrate, analyze, collaborate and act on data gotten harder. 📈 disparate systems, 📈 of social media, billions of things connected 2 Internet, accelerated 📈 of data. Security more complex, privacy rules stricter

(5) $PLTR risen to challenge. morphed into product from its days as consultancy. While concerns about their ability to penetrate the commercial market, I believe Palantir offers investors one of most appealing risk/reward quotients and it has potential to be a multi-bagger.

(6) thematic

"Data is new oil", is tailwind behind $PLTR.

In last 2 years, 90% of 🌎's data has been created.

Data analytics help co's achieve productivity gains of 6 - 8%, returns 2x investment within decade. higher return rate of return than 💻 investment cycle in 1980s

(7) McKinsey found most companies are capturing only a fraction of potential value from data and analytics.

Org's aren't able to yield the massive value buried deep in their data.

(8) market opportunity

Palantir defines $119B market opp as commercial ($56B) and government sectors ($63B) consisting of two platforms - Gotham for government customers and Foundry for commercial enterprises.

(9) Gov't headwinds
-2018 legal victory in federal 👨‍⚖️requiring 🇺🇸 gov to consider commercially available products, such as $PLTR, b4 building custom
- AI arms race happening between nations. $PLTR likely 2 benefit because of their AI capabilities, security, privacy.

(10)Commercial market

For $PLTR to reach full potential, must continue to penetrate commercial.

Despite Foundry being used in 40+ different industries, one of the common bear arguments about Palantir is that they have too few commercial customers.

(11) Counter bull case - lots of greenfield. It's not that commercial organizations are not getting value from Palantir's software, just check out some of these juicy headlines about their commercial customer wins:

(12) energy co deployed $PLTR ERP suite in hrs. generated $57 million of cash savings and expect to generate $1 billion annualized
An aerospace customer signed the largest commercial deal, a $300 million five-year renewal in midst of pandemic

(13) $PLTR & 3M expand relationship to build dynamic supply chain

$PLTR and bp (NYSE:BP) have extended their partnership to support bp as it works towards its ambition to become a net zero company by 2050

Germany’s Merck Taps Palantir for Big Data Health Initiative

(14) So if $PLTR Foundry is providing massive benefits and getting renewed in deals with many additional O's more than initial contract, why do they have low penetration rates in comm market? To answer we have to better understand PLTR's “Acquire, Expand, and Scale” sales cycle

(15) $PLTR sales cycle is long and typically produces negative unit economics until they reach the scale phase with a customer, once some initial value has been realized by customer

(16) considering Foundry is only 5 years old and it takes on average 6 - 12 months before the beginnings of material revenue from an account start to appear non the income statement it shouldn't be shocking Palantir has a limited number of commercial customers.

(17) $PLTR's upfront biz dev investments well placed, once customers reach scale phase, unit economics do complete 180.

From S1
In H1 2020, top 25% of customers by contribution margin in the Scale phase as of the end of 2019 had a contribution margin during the period of 89%.

(18) As comm. business matures & $PLTR converts more customers from Expand to Scale, margins will improve, costs will compress, and revenue concentration will diversify. PLTR also investing to optimize deployment(, leading to shorter sales cycles and accelerating time to scale.

(19) Another anchor on comm. efforts has been lack of direct sales force. For long time CEO Alex Karp was hwavily involved in their sales process. They are now scaling - 100 new sales hires in H1, expanding distribution channels thru new partnerships with IBM, accenture, etc

(20) Product

Many tech co's have promised game changing insights from data exhaust org's are spewing every second. There were great riches to be unearthed. value props of these tools, to help find the needle in haystack, have gone unfulfilled for decades. That is until $PLTR

(21) Each of $PLTR platforms are vertically integrated s/ware solutions across data lifecycle. 3 layers to each solution - data integration platform, comprehensive suite of analytical tools, and platform for building apps that get consumed by biz users to drive important outcomes

(22) $PLTR's 3rd platform, Apollo, manages & deploys Foundry/ Gotham anywhere customers need it to run - across multiple clouds, on premise, or classified networks.
brought compelling economics of SaaS to any situation or environment without security or privacy trade-offs.

(23) Many Wall St analysts not giving $PLTR credit for its optionality. big knock on PLTR is they are just a government vendor and as such are constrained by inherent ceiling on public sector technology spend.

(24) #PLTR has a large commercial business today + has its sights set on pursuing the economic value of being an entire industry platform, Palantir is pursuing multiple, new segments including AI, digital twins, no-code/low code, and the mid-market segment.

(25) For those willing to think long term, drill deeper into economics, favor a better mouse trap in a product space that matters and consider the megatrends driving the market opportunity, Palantir can be evaluated as a long term growth story