Palantir’s Hidden Risk: 20% of Its Commercial Business Is a Single Customer

I came across an incredible stat while doing a little research on Palantir Technologies, Inc today:

The company has only ~125 customers despite being in the business for nearly two decades and as a result, it’s not diversified enough. Right now, the top 20 clients generate 70% of the overall revenues, while one commercial client generates over 20% of the overall commercial revenues. As a result, if a single major organization decides to cut its partnership with Palantir and look for other alternatives to utilize its data, then Palantir’s stock will likely lose significant value and its top-line performance will crumble.

20% of the commercial business is a single customer! And the vast majority of the business, both commercial and governmental, is just a few big customers. That’s a risky proposition. I do see some conflicting figures for what exact percentage of their business is their top 20 customers, but suffice it to say, it’s a very large share.

If anyone has an educated guess who that one giant commercial customer is, do leave it in the comments!

Keep in mind that this company loses $100 million a month and has never made a profit in its 18 years of existence. The common retort is that they’re scaling a business for the long term, like Google or Amazon. But those companies were profitable far sooner.

Palantir’s shares have trended downwards since I first wrote about the company last month despite its popularity with Reddit’s Wallstreetbets. A month later, the company doesn’t look any better.

For more on Palantir, check out these posts:

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Photo: Palantir co-founder Peter Thiel. “Peter Thiel” by jdlasica is licensed under CC BY 2.0

2 thoughts on “Palantir’s Hidden Risk: 20% of Its Commercial Business Is a Single Customer”

  1. I bought stock in Palantir right after the IPO at around $10.50. If you had told me that it would reach $20 by the end of the year, I would have been thrilled–and it has gotten as high as around $40. I’m still excited about its long term prospects but I don’t think the fundamentals justify the recent crazy prices.

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    1. Yeah at a lower price it might make sense but the current price is a bit much. I’m skeptical of a company that’s lost money for 18 yrs since Google and Amazon hit profitability way sooner

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