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:
- Palantir Is Losing $100 Million a Month With No End in Sight
- Palantir Insiders Are Dumping The Stock. What Do They Know That You Don’t?
- Palantir Options Are Bullish, But This Company Is Still a Dog
If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!
Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!
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”
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.
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