Young, amateurs and full of enthusiasm: the fans who invest in Palantir

Alex Karp ran on the outskirts of the forest holding neon-pink ski poles, then paused to address his employees and shareholders: “Everyone in the company, and in the world at large, should celebrate that the rebels won,” said CEO Palantir (PALANTIR), the data analysis company for the defense market, in a YouTube video published a few days ago. Karp felt victorious. The company he founded two decades ago was chosen to join the S&P 500 stock index in the index update that will take place this month.

Although not a consumer brand, Palantir has developed a passionate fan base among hobbyist investors. They exchange detailed analyzes and masses of memes on social media platforms like X, making videos analyzing everything from earnings reports to product news on YouTube. A Reddit forum dedicated to the stock, called r/PLTR, has about 60,000 members. Supporters sometimes call the company “Filly”, an affectionate name that some claim was born in “Discord”.

“It’s almost like a giant chat from all over the world putting together research,” Brett Krieger, a 27-year-old accountant from Florida, said of the stock’s online community. About half of Palantir’s outstanding shares are privately held, according to FactSet. That’s a higher rate than most companies, including Tesla, a favorite among small investors. Karp said Palantir’s private investors are “brave enough to invest their money … in what they believe in.”

A hat with the CEO’s signature in a glass frame

The shareholders were rewarded this year. The stock more than doubled in 2024. Companies that are added to the S&P 500 often get a boost in share price, as index funds — which manage trillions of dollars — buy stocks to match the index’s composition. Shares of Palantir have risen for six straight trading days, adding about 17% since the announcement on the S&P 500.

Krieger has owned Palantir stock since 2021. It is his largest investment, accounting for more than half of the total value of his brokerage account. As part of a Palantir giveaway, he won a hat signed by Karp, which he displays in a glass frame in his office.

Like many of his colleagues, Krieger is a fan of Karp. The eccentric CEO, who holds a doctorate in philosophy, is a provocative, non-conformist personality with graying curly hair. Karp has been vocal about geopolitics, including his support for Ukraine and Israel.

Many private investors are also attracted to the firm’s pro-American stance, which refuses to work with countries like China and Russia. “They have big ideas about how the country should be run, or what the desired world order is,” says Danny Garcia, 32, who works in medical manufacturing in Arkansas. His investment in Palantir, which is worth more than $100,000, makes up almost his entire stock portfolio.

Garcia also won a hat signed by Karp in a recent competition. “It’s pretty exciting as a shareholder,” he said. Palantir embraces its small shareholders, who eagerly buy company logo baseball caps ($35) and T-shirts ($41). “We have the best investors in the world, especially the private investors,” Karp said in a conversation with the publication of the results in May.

After the crystal ball in “The Lord of the Rings”

The large base of private investors can be attributed in part to the unconventional manner in which the company went public. Palantir debuted on the New York Stock Exchange in 2020 through a direct listing, where a company simply starts trading on the stock exchange on a pre-determined day. In a traditional IPO, companies work with investment bankers and allocate shares to large investors.

“Institutional investors thought Palantir would never be a relevant enterprise player,” said Dan Ives, an analyst at Wedbush Securities, who is bullish on the stock and compares Palantir’s investment fervor to Tesla’s excitement. “The investors believed in her, and that was essential for Palantir.”

Palantir, named after a crystal ball in the “Lord of the Rings” series, was founded in 2003 by a team that included Karp and chairman Peter Thiel, an early investor in Facebook and the founder of PayPal.

Thiel wanted to develop software that would fight terrorism. Palantir began working with the US intelligence and defense agencies, and now sells data analysis software to governments and businesses around the world.

The company has said its software is essential in modern warfare and helps U.S. allies in wars in Europe and the Middle East. It has come under fire from privacy advocates and some employees for its work with law enforcement; its software has been used by U.S. Immigration and Customs Enforcement to track down illegal immigrants .

Although Palantir still makes most of its money from government districts, its commercial revenue is growing. Corporate clients include United Airlines and BP, the natural gas giant. Last year, the company launched an artificial intelligence platform that Palantir believes will lead to its growth. This is consistent with the hysteria in the stock market surrounding investing in AI-focused companies.

Professional investors were cautious

Palantir shares trade at about 25 times expected sales over the next 12 months, compared with an average of about 10 times for software companies in the S&P 500, according to FactSet. “You’re actually trading at an unsustainable level,” said Brent Thiel, a Jefferies analyst who rates the stock a “hold” recommendation.

Palantir’s financial results have been inconsistent in the past, another reason why some professional investors have been wary of the stock, Thiel said. The company was not profitable until the fourth quarter of 2022.

A stock with relatively low ownership by institutional investors can be a potential warning sign, according to Thiel. Wall Street tends to see private investors as prone to short-term movements, while professional money managers are often seen as stable, long-term investors. Palantir did not respond.

Optimistic investors say Wall Street doesn’t understand the company. For them, it’s worth paying for the growth they expect from Planetir. Neil Rosenbaum, 30, from Belgium, has a large following on social media and produces daily videos about stocks. He started buying Palantir stock around the time the company went public, following his scouts’ encouragement to research the stock. Today Palantir makes up about 8% of his portfolio. “This is not a meme stock,” Rosenbaum said. “It would be surprising if the Ministry of Defense used the Mem company.”