Palantir

Core Business of Palantir

● Palantir sells data collection via data mining platforms. The program “Gotham” is for government customers while “Foundry” is for private and commercial customers. They now have two more platforms named “Metropolis” and “Apollo”.

● One risk with Palantir’s business model is that they could be vulnerable to lawsuits stemming from compromising citizen’s rights. Palantir was born out of necessity to combat terrorism and has since been adapted for private and commercial use. Another risk with Palantir’s business model is that they rely heavily on government contracts for revenue. If these contracts were not to be renewed, they could face major profit loss.

● Palantir’s competitors include companies such as Microsoft, IBM, and Alteryx

Sources:

● Palantir 10-K and Annual Report ● Thestrategystory.com, Businessmodelanalyst.com ● Discussion Boards 1 and 4

Palantir Business Model

https://thestrategystory.com/2022/10/21/how-does-palantir-make-money-business-model-competitor-analysis/#:~:text=The%20business%20model%20of%20Palantir%20primarily%20ma kes%20money%20from%20the,%E2%80%9D)%3B%20and%20professional%20services.

History of Palantir ● Palantir was founded by Peter Thiel in 2004, Thiel named the company after a Lord of the Rings reference. Their work with big

data analytics has been proven to be very crucial for the United States and the security on millions of people. Palantir is an American software company that is known for its big data analytics, and they specialize in many well-known safety features, some of which are designed for the United States Department of Defense, and are counter-terrorism, human trafficking, drug smuggling, and much more.

● In its lifetime Palantir has acquired a handful of companies. Palantir has acquired Kimono Labs, FT Technologies, Silk, Voice Gem, and Propeller.

● Products which Palantir has launched: ○ AI/ML. ○ Automotive and Mobility. ○ Cryptocurrency. ○ Ecosystem. ○ Federal Health. ○ Foundry Data Integration. ○ Foundry Pipeline Builder. ○ Govt Financial Management.

● Sources: Discussion board 5 & Internet research

Citations

Greenberg, Andy. “How a 'Deviant' Philosopher Built Palantir, a CIA-Funded Data-Mining Juggernaut.” Forbes, Forbes Magazine, 12 Oct. 2022, www.forbes.com/sites/andygreenberg/2013/08/14/agent-of-intelligence-how-a-deviant-philosoph er-built-palantir-a-cia-funded-data-mining-juggernaut/?sh=1b9b5ef47785Links.

“About Palantir.” Palantir, www.palantir.com/about/.

Founder/CEO Bio Founders and CEOs put their mark on even large companies.

● CEO – Alex Karp: Born in New York City and raised in Philadelphia. Earned his bachelor’s degree at Haverford college in 1989 and a juris doctor degree from Stanford University where he also met co-founder Peter Thiel

● Co-founder – Peter Thiel: Born in Frankfurt, Germany and immigrated to America with his family as a kid. Graduated from Stanford law school and became the first outside investor in Facebook. With the money he invested, he also became a co-founder of Paypal

● The growth of the company came from providing analytic tools for governments and private organizations ● Current involvement is they’re continuing Palantir’s expansion in Australia with WesTrac partnership to improve data

discovery across multiple data sources and scale solutions to be delivered across multiple WesTrac workshops.

Sources:

● Discussion Board 5 ● Internet research

https://www.palantir.com/newsroom/press-releases/palantir-continues-expansion-in-australia-with-westrac-partnership/

https://www.businessinsider.com/palantir-ceo-alex-karp-bio-life-career-family-education-2020-7

Management’s assessment of company’s prospects

Successes: ● In the US market alone, they have

crossed the billion-dollar mark. ● Their revenue and number of new customers

have more than doubled in two years. ● They have $2.4 billion in the bank and no debt. ● They have also generated $461 million in cash

flow from operations over the past two years.

References: https://www.palantir.com/newsroom/letters/letter-to-shareholders/november-7-2022/en/ https://www.bloomberg.com/news/articles/2022-05-09/palantir-losses-mount-showing-challenge-with-automated-software

Challenges: ● “Development of a system for enabling users

themselves to construct an architecture of the world within which they operate and then to create objects onto which data attaches.”

● The company struggles to improve margins by offering more automated data analysis software.

Future outlook: “We are building the digital infrastructure that makes continued industrial progress in late capitalism possible”

Balance Sheet At the time of filing their 2021 Form 10K, Palantir Technologies had total assets of $3.25B & total liabilities of $956M. Net cash provided by operating activities was $333.85M, net cash provided by financing activities was $306.75M, and net cash used in investing activities was ($397.9M). This provided for a net increase of $238.77M in cash and cash equivalents.

● Palantir’s balance sheet shows a healthy Current Ratio of 4.34 (2,863,250/660,061=4.34), and $2.2B of Working Capital. While this shows a strong ability to meet current obligations, they do show some concern regarding future working capital in the Annual 10K.

● The data shows that Palantir is experiencing strong year-over-year growth, even throughout the economic downturn caused by the coronavirus pandemic. In the past the company states they historically showed a loss from operations and relied on financing activities for positive cash-flows, the fact that they are now able to generate positive cash-flows from both is promising.

Sources:

● Discussion Board 2 ● Annual Report/10-K

The Bottom Line:

● Palantir Technologies operated at a loss in the 2022 financial year ● The company's financial year, which ended on September 30, 2022, shows it suffered a loss of $1.307B (Palantir

Technologies, 2022). ● This is a 31.79% decline from 2021 financial year ● The loss has been decreasing on a year-to-year basis since 2019. ● The company has attributed its loss to geopolitical instability, economic crises, and COVID-19 post-effects (Palantir

Technologies, 2022). ● These factors have significantly affected the firm's sales growth.

Sources:

● Discussion Board 3 ● Annual Report and 10-K ● ´Palantir Technologies Net Income/Loss 2019-2022 (2022). Available at:

https://www.macrotrends.net/stocks/charts/PLTR/palantir-technologies/revenue

Ratios A website called seekingalpha.com displays many relevant measures for specific companies, including the quick ratio, current ratio, earnings per share, and a few other ratios. A comparison between values reported by the Wall Street Journal confirm that the values calculated by seekingalpha.com are accurate for Palantir. It can then be assumed that the ratios reported for other companies for comparison to Palantir are accurate as well.

● Palantir’s earnings per share is at -0.27 or -0.28, which is weak in comparison to competitors. ● Palantir’s quick ratio and current ratio are higher than competitors, suggesting strong liquidity. ● Palantir’s book value per common share is 1.15, which is also very low compared to competitors.

Sources:

● “Palantir Technologies Inc. (PLTR) Key Stats Comparison.” SeekingAlpha, https://seekingalpha.com/symbol/PLTR/peers/comparison.

● Journal, Wall Street. “PLTR | Palantir Technologies Inc.. Financial Statements – WSJ.” The Wall Street Journal, Dow Jones & Company, https://www.wsj.com/market-data/quotes/PLTR/financials.

Shareholders

● Palantir has not paid a dividend in the past 12 months ● They have never paid a dividend ● Palantir went public in Oct. 2020

○ Stock price decreased 56% this year. ○ Stock price decreased 11.5% since going public. ○ Stock was highest value Jan. 2021 at $35 per share.

● S&P and PLTR both decreased in value this year ○ S&P decreased by 16.4% compared to PLTR’s 56%

● Before this year both PLTR and S&P increased ○ S&P increased 37% and PLTR increased 83%

Sources: ● Analyst research ● Discussion Board Week 3 (Statement of Retained Earnings)

https://seekingalpha.com/symbol/PLTR/dividends/hypothetical https://www.macrotrends.net/stocks/charts/PLTR/palantir-technologies/dividend-yield-history https://www.bloomberg.com/news/articles/2020-10-04/palantir-s-long-awaited-public-debut-frustrates-some-investors

Corporate Citizenship ● Palantir is aware of the controversy surrounding its software, and makes an argument for why its services are

needed. ○ Alex Karp defended Palantir’s services, arguing the company a Patriotic company and Google is not. Google

opted to not renew defense contracts that Palantir then picked up. ● Critics 2 Main Issues: Insufficient attention to privacy rights & Contracting with US Immigration Enforcement

○ Hundred of employees protested the companies decision to contract with ICE and have called on Palantir to be more aware of how police agencies may be utilizing their data analysis software

○ Leadership at Palantir has decided to double down and continue providing software services to government agencies, stating “immigration policy is not a software challenge; it’s a political one”.

● CSR Hub has given Palantir a 22% ESG rank compared to 31,156 other companies ○ Their rank compared to 2209 other companies is in line with the software industry average

Sources:

● Posner, M. (2019, September 12). How Palantir Falls Short of Responsible Corporate Conduct. Forbes. https://www.forbes.com/sites/michaelposner/2019/09/12/what-companies-can-learn-from-palantir/?sh=32fde78f16e0

● CSR information for Palantir Technologies Inc. (n.d.). CSRHub – Integrate ESG With Investing, See ESG Ratings and Sustainability Info on Over 53,584 of the World’s Largest Public and Private Companies. https://www.csrhub.com/CSR_and_sustainability_information/Palantir-Technologies-Inc

● Discussion Board 4

Employment Opportunities ● For Graduates they are eligible for “Early Talent” Internships, this is designed for students with little to known

experience in the industry.

● Palantir is considered a good place to work according to the experiences of recent interns that finished there internship

program, Interns are treated like real employees where they are encouraged to ask questions and give feedback.

● Interns are giving important tasks, a recent intern experience was unique because he got feedback from customers of

palantir that they would use his model that he built during his time at the internship.

● “Take-What-You-Need” Time Off Policy adds to why Palantir is a good place to work for, as they are flexible for their

employees for any long weekends, religious holidays, school breaks for parents, and they arrange with individuals who

need to work from home.

Sources:

● Palantir website ● Discussion Board 5.

Palantir Careers | Getting Hired

Concluding Remarks A sum of what our group has learned about Palantir as a group and what we have shared together in our discussion posts.

● A few of of us have found the company to be profitable and healthy. It was shared that Palantir has $2.4 billion in the bank with no debt.

● A couple of us have stated since Palantir’s stock prices have become lower compared to last years, that it would be a good opportunity to invest into Palantir stocks.

● Some of us believed that Palantir can be a great place to work based on their global production rights and worker rights.

● One of Palantir’s challenges includes privacy. Some of us have shared that Palantir can work on protecting customers privacy by not sharing personal information with government officials. A few of us have also stated that they could also work on sharing their own data based on their diversity in their workforce. They have been coy with sharing that type of information with the public.

References go here (use small print).

Core Business of Tesla

Tesla, Inc. is an American multinational automotive and clean energy company headquartered in Austin, Texas. Tesla designs & manufactures electric vehicles (EVs), battery energy storage from home to grid-scale, solar panels + solar roof tiles, and related products & services.

● Tesla sells luxury electric vehicles, energy storage & solar energy solutions. ● Demographic: Caucasian, household income: $146K, Age: 54 yr/old median, 71% male, 88% own a home. ● What are the main risks to Tesla’s business model? Other companies producing competitive EVs. ● Who are Tesla’s key competitors? Ford, GM, NIO, & Volkswagen.

Sources:

● 10-K & Annual Report ● Internet Research ● Discussion Boards 1 & 4

Hafeman, Emily. “Tesla, Inc..” Wikipedia. Wikimedia Foundation, September 26, 2022. https://en.wikipedia.org/wiki/Tesla,_Inc.

Team, The Investopedia. “Who Are Tesla's (TSLA) Main Competitors?” Investopedia. Investopedia, September 1, 2022. https://www.investopedia.com/ask/answers/120314/who-are-teslas-tsla-main-competitors.asp#:~:text=Who%20Are%20Tesla's%20Top%203,over%20450%2C000%20EVs%20in%202021.

Wright, Charles. “Tesla Owner Demographics by Age, Income, Gender, Home Value.” Hedges & Company, September 1, 2022. https://hedgescompany.com/blog/2018/11/tesla-owner-demographics/.

History of Tesla

Brief History of Tesla:

● 2003 – Tesla was founded by the engineers Martin Eberhard and Marc Tarpenning in San Carlos, California.

● 2004 – Elon Musk joined the company and invested $30 million into the company and became the chairman of its board of directors.

● 2007 – Eberhard resigned as CEO. Succeeded first by Michael Marks, then Ze'ev Drori took over as Eberhard's permanent replacement in November.

● 2010 – Tesla goes public, raising $226 million in its Initial public offering (IPO). ● 2014 – Tesla announces its Nevada Gigafactory, where the company will manufacture the

batteries for all of its products. ● 2015 – The company enters the solar power market, announcing a line of products to power

homes and businesses based on a combination of solar panels and batteries. ● 2017 – Tesla Motors changes its name to Tesla, Inc.

History of Tesla Vehicles

● 2008 – The Roadster enters production (prototyped in 2006) ceased production 4 years later. ● 2012 – Tesla Model S is revealed (announced in 2009, prototyped in 2011). ● 2015 – Tesla released the Model X. ● 2017 – Tesla Motors changes its name to Tesla, Inc. & Tesla launches the Model 3. ● 2021 – Tesla releases the Model S Plaid. ● 2020 – Tesla releases the Model Y (unveiled in 2019). 2008 Tesla Roadster:

Sources:

● Cadie Thompson, Kristen Lee. “Tesla Just Celebrated Its 12th Year as a Public Company. Here Are the Most Important Moments in Its History.” Business Insider, Business Insider, https://www.businessinsider.com/most-important-moments-tesla-history-2017-2#february-2008-teslas-first-ro adster-is-delivered-5.

● Reed, Eric. “History of Tesla: Timeline and Facts.” TheStreet, TheStreet, 4 Feb. 2020, https://www.thestreet.com/technology/history-of-tesla-15088992.

● Staff, Wikimedia. “Tesla Roadster (First Generation).” Wikipedia, Wikimedia Foundation, 22 Oct. 2022, https://en.wikipedia.org/wiki/Tesla_Roadster_(first_generation).

Marc Tarpenning, Founder

● Born June 1st, 1964 in Sacramento California, Tarpenning earned his B.A. degree in computer science in 1985. Tarpenning is said to live by the maxim: "find a problem you care about and produce a product to solve it" [1].

● Tarpenning first met Eberhard in 1997 when they started an e-book company. They reunited in 2003 when they started Tesla Motors. The founder’s original business plan revolved around the desire to produce a product that wasn’t simply better for the environment, but a better all-round product. This was the pitch the two founder’s hooked Elon Musk with in 2004. By Jan. 2008, Tesla had its first production line, & was planning for the Model-S.

● Tarpenning served as CFO & vice president of engineering until 2008 when he left and Musk took over leadership of the company.

Sources: ● Discussion Board 5 ● Internet research

[1] https://innovators.berkeley.edu/spotlights/co-founder-marc-tarpenning-85-shows-off-teslas-baby-pictures/ [2] https://www.businessinsider.com/tesla-the-origin-story-2014-10

The less well known Tesla's founder Marc Tarpenning seems to have favored keeping a lower profile than his co-founder Martin Eberhard.

Management’s Assessment of Tesla’s Prospects

Challenges for Tesla:

● Had to recall some of its vehicles due to safety concerns that resulted in pinched fingers by automatic windows.

● Lawsuits for false advertisement negligence, fraud, & deceit laws about their autopilot system where Musk promised Tesla vehicles would be able to perform a fully autonomous cross-country drive in 2016 & again in 2019.

● Long wait times on delivering vehicles.

Success of Tesla:

● Vehicle Model S that premiered in 2013 was named: “best car ever tested”. ● Become the leader of electronic car market with a marked capitalization of over $900 billion. ● First to produce an electric vehicle in 2008 that could achieve 245 miles on a single charge.

Management’s Assessment of Challenges & Opportunities for The Future:

● Keep Tesla as the leading producer of EVs in the future. The market is growing with other big car manufacturers like Mercedes Benz & BMW producing electric vehicles.

● Expand on their current leading technology to keep producing the best EVs ● Produce vehicles on time to keep customers satisfied & not choosing another EV brand. ● Be on top of safety in their vehicles to avoid recall products & thereby less customers satisfaction.

Sources:

● Manager’s/founder’s/board’s letter ● Discussion Board 1 ● Team, TopGear. “Tesla Model Y Review 2022.” Top Gear, 1 Mar. 2022, https://www.topgear.com/car-reviews/tesla/model-y. ● Wu, A. (March 14, 2022(. The Story Behind Tesla’s Success (TSLA). Investopedia,

https://www.investopedia.com/articles/personal-finance/061915/story-behind-teslas-success.asp ● Makinson, R. (April 21, 2022), Secrets Of Success: How Did Elon Musk’s Tesla Make It To The Top?. CEO TODAY.

Secrets Of Success: How Did Elon Musk’s Tesla Make It To The Top?

Tesla Model Y SUV Photo Source: TopGear

Balance Sheet Consolidated Balance Sheet:

– Total Assets: $62,131 (2021) $52,148 (2020) – Total Liabilities: $30,548 (2021) $28,418 (2020) – Total Liabilities & Equity: $62,131 (2021) $52,148 (2020)

Solar Energy:

– $1,187m in 2021 – $955m in 2020

Property, Plant, & Equipment Net Accumulated:

– $6,731m in 2021 – $5,117m in 2020

● Balance increased after COVID. ● All products increased due to

manufacturing.

Sources:

● Discussion Board 2 ● https://www.sec.gov/Archives/edgar/data/1318605/000095017022000796/tsla-20211231.htm

The Bottom Line Bottom Line: The net income of a company.

2021 Tesla net income: $5.644B

– Tesla was highly profitable in the year of 2021 making over $5 billion.

Sources of Profits in 2021: Sources of Losses in 2021:

1) Automotive sales & Leasing (+$12.374B) 1) Misc. Services (-$0.104B) 2) Regulatory credits (Governmental Incentives) (+$1.465B) 2) Energy Generation/Storage (-$0.129B)

***The 4 Major Sources of Revenue for Tesla***

The Net Income of Tesla has increased dramatically from 2019 to 2021:

– Tesla has been increasing its overall profitability over time. – Automotive sales, leasing, & regulatory credit profits have consistently increased. – Energy Generation/Storage & Miscellaneous Services

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