Palantir's SPAC Strategy: A Closer Look

This article was edited by Andrew Salamon, head of content at Daily Palantir. You can follow him on twitter/x here

Was Palantir's SPAC investment strategy a blunder or brilliance in disguise?

The buzz surrounding Palantir’s SPAC strategy has been a source of controversy for quite some time now. From Bloomberg analysts to retail investors, the general consensus has pointed towards Palantir's decision as a misstep. However, the latest data analysis offers a more nuanced view, challenging the popular notion.

For the uninitiated, in the boom of early 2020 and 2021, marked by zero percent interest rates, Palantir invested in 20 SPACs. These companies went public, and many retail investors found themselves holding the short end of the stick. Investing in overvalued companies seemed a viable strategy because, after all, it was 2021 and interest rates were negligible. But as market dynamics shifted, Palantir had to make some tough decisions regarding its SPAC positions.

Diving Deep into the Numbers

Amir, a notable Palantir content creator and analyst, recently performed an in-depth analysis on Palantir's SPAC debacle. He suggests that contrary to popular belief, Palantir's SPAC strategy hasn't been all bad. Their recent 13F discloses a 12% return on their SPAC investments. This counters the narrative spun by many, from Bloomberg to Wall Street analysts, that these investments were ill-conceived. They began with an equity value of approximately 259-260 million and now are up at 290 million.

Like any investment strategy, Palantir's involvement with SPACs wasn't devoid of hiccups. Companies like BlackSky, Sarcos Robotics, and Celularity have been phased out of their portfolio. Some, like BlackSky, seemed promising. Others, like Bird (a scooter company), raised eyebrows for their less-than-strategic fit. But some investments have shown promise. Lilium, for instance, stands out as an electric jet space company. Instead of purchasing shares, Palantir received them as grants, indicating a unique position of leverage in the deal.

Revenues, Returns, and Rationale

Here's the breakdown: Out of the current 290 million value, $171 million comes from total revenues recognized from the SPACs. The sale of stocks brought in $109.9 million, with the current equity value of public positions resting at $8.8 million.

What's intriguing is Palantir's revenue recognition from these SPACs, especially in cases like Lilium. They secured deals that brought in up to 5x the revenue of their average client. Such deals, especially in a zero-interest-rate environment, show that Palantir was not merely throwing money at any and all SPACs but was strategic in its approach.

But, beyond revenues and returns, Amir emphasizes another invaluable advantage: free R&D. Palantir was on the frontlines of several new industries, dabbling in electric jets, EV operating systems, geospatial intelligence, and stem cell-based therapy, among others. This exposure placed Palantir's software right at the heart of cutting-edge developments.

In Conclusion: A Strategic Play?

It's easy to judge in hindsight. But investment strategies, especially those of trailblazers like Palantir, are more about vision than immediate results. While some SPACs didn't pan out, the breadth of experience and exposure they gained is undeniable. And, as the latest figures suggest, they might just have had the last laugh with a strategy that was more informed than initially perceived.

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People Mentioned in the Article: Emir Twitter/X: Emir