Palantir Holds Gold, Not Bitcoin.
It is a good thing that Palantir does not hold bitcoin on their balance sheet.
Now even though we know one of Palantir’s co-founders, Peter Thiel really likes bitcoin, it is a good thing that Palantir does not hold bitcoin on their balance sheets. Peter Thiel went so far as to actually call Warren Buffet a sociopathic grandpa for being against bitcoin.
Nonetheless, even though he co-founded Palantir, they have not owned bitcoin and the reason for this is because crypto is volatile, not sure if you're paying attention to the crypto markets, but they're not good.
If we enter into a recession, make no mistake about it, crypto will go down. Arguably, we are in a recession right now which could explain the drastic decline in all of these “Risk Assets'', stocks included. Bitcoin is not immune to macro level trends, in fact it performs quite similarly to growth stocks and to the Nasdaq, just perhaps a bit more extremely.
Bitcoin peaked in November of 2021, around the same time Palantir released Foundry for crypto. Had They put bitcoin on their balance sheet back then, they would be taking some extreme impairment losses as BTC is down over 75% from the highs.
Tesla Impairment Losses
Tesla on their Q2 earnings had to take a $200 million dollar impairment loss because bitcoin was at $25,000 at the time. Tesla had roughly 42K BTC with a cost basis slightly under $30,000.
With a position that large, every $5,000 that BTC drops they would have had to take another $200M loss.
Tesla currently holds just over 10,000 Bitcoins, having sold many for a loss.
That reason alone, it is a great thing that Palantir does not own bitcoin on their balance sheets. Unlike Tesla, who is profitable, Palantir is still working towards a state of profitability. They literally cannot afford to take impairment losses due to a volatile asset like Bitcoin.
Even though it's great Palantir is not holding bitcoin, and we're not down on bitcoin, we are down on SPACs because we're Palantir shareholders and we have to be down on something.
Unrealized losses for Palantir due to their extensive list of speculative SPAC investments, are contributing currently to what's holding us back from profitability.
Out of Palantir’s 24 SPAC investments, on average, they are down 80% from the peak.
So even though we're not down on bitcoin, we are getting chewed up by other investments.
It speaks to the clarity Palantir had back in August 2021 when they decided to buy $50M in gold. Not only has inflation peaked at 9 percent, but interest rates have also rose.
As a result, rates rising has led to valuation for all growth stocks to decline, including cryptocurrencies which ironically follow the trend of growth stocks (and not inverse to them, as a supposed hedge to inflation as many people would argue.)
Palantir not holding bitcoin, along with having zero debt and 2.4B in cash, makes them one of the strongest growth companies to exist in the current macroeconomic environment with a larger than average chance of surviving the next 18 months of a potentially horrible market.
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