Technology

Peter Thiel's palantir explodes as Trump's prospects deteriorate

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Peter Thiel, Co-Founder and Chairman of Palantir Technologies Inc., speaks during a press conference in Tokyo, Japan on Monday, November 18, 2019.

Kiyoshi Ota | Bloomberg | Getty Images

Palantir, the data analytics software company co-founded by Peter Thiel, one of President Donald Trump's former top allies in Silicon Valley, has just completed its best two days since going public in September, despite Trump's prospects for a second term deteriorating .

Palantir's shares rose 17% on Friday, after rising 11% the day before. The stock closed the week at $ 13.83, up 38% from its debut price.

Thiel, the company's chairman, saw the value of his stake, which was owned by various companies, increase by over $ 700 million in the past two trading days. Thiel was a key supporter and advisor in Trump's 2016 campaign, but the venture capitalist did not support the president's re-election efforts. As of Friday, Trump trailed Democrat Joe Biden, who had just 17 votes less than the 270 votes needed to win and was making significant strides in key states.

Given Thiel's ties to the major Trump and Palantir government contracts, some investors may have viewed the Trump company as better off than a Democratic government. However, Mark Cash, a stock analyst at Morningstar, said investors are more familiar with the company's history and are not concerned about disruption due to a change in the White House.

Cash didn't have a good explanation for the stock's dramatic rise, but was optimistic about the company's third-quarter earnings report planned for next week.

"Management doesn't matter to their valuation or market opportunity," said Cash, who has a price target of $ 13 on the stock. "You've gone through both sides, Democrats and Republicans. You're not new to this area, just new to the public."

Shortly before Palantir's market debut, the Department of Defense announced that it had awarded the company a $ 91.2 million contract to provide research and development for the Army Research Laboratory over the next two years. Palantir has grown by continuing to do major government deals while building a list of private sector clients.

Cash said the company has a "nice pipeline of contracts" including doing business with customers who use its data tools to respond to Covid 19, whether in public health or to direct medical care.

He also said that Palantir might be able to do business even in an administration that is pulling back on defense spending because the company has gone deeper into software and away from consulting to make its products more efficient.

"If a deflationary defense spending environment arises, it can be to their advantage," said Cash. "Agencies are unlikely to be able to take on these expensive, multi-year consulting efforts, but want to use standard solutions that have already been produced."

CLOCK: Palantir's potential customer base is a fundamental issue

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Katherine Clark