The Odd Similarities Between Tesla & Palantir
Tesla and Palantir are two companies that are often compared to each other. While people have various reasons to compare them, one reason stands out when thinking about the similarities they have: cult-like retail followings.
Retail loves these two companies. I mean, you are reading this article on a website called dailypalantir.com
There is something about, or many things about, Palantir and Tesla that get retail investors excited. While institutions have mandates and obligations that determine their investment decisions - retailers have one thing that fundamentally differentiates them: access to social communities.
The stocktwits ticker for $TSLA has 790,761 watchers. The stocktwits ticker for $PLTR has 195,444 watchers. Stocktwits is a website that is essentially twitter for stocks, and the number of watchers are often used as a metric to gauge retail sentiment. Both companies have massive followings on the platform.
Retail investors communicate through stocktwits, twitter, discord, reddit, YouTube, and many other platforms that connect their shared knowledge and due-diligence around a company. Having been a part of various Palantir discord/twitter groups myself, the amount of information I come across is outstanding.
Institutions have access to a lot of information, but there are moments when enough people come together to do due-diligence at levels that some institutions could never fathom - the sheer collective will of a group of people that want to understand their investment better can be exponential with information gathering.
For example, I found out last week and broke the story that the UK is working with Palantir to help Ukrainian refugees, and only found out about that because of a twitter DM I got from another retail investor.
So, what similarities exist between Tesla & Palantir?
Wall Street Doesn't Get Them
Well, this one should be obvious. Wall Street doesn't understand growth stories that don't align with their metrics. For years, Tesla was misunderstood and until people finally started coming around to what the larger growth story was and how they would scale beyond just cars.
Tesla is valued as a technology company because their cars are more than just a way to get to and from a locations - their cars are an experience. If those cars could reach a level of FSD, or full self driving, then Tesla will have the ability to actually have autonomous cars powered by AI drive people, unlocking priceless amounts of time for humans to be more productive.
Palantir is a company that wants to be the shovels for the gold, not the gold itself. If gold is data, Palantir's use of AI is to figure out how to create technology that can make sense of that data.
Very few companies have the ability to actually interpret, analyze, and give meaningful insights to a company or government on the data they have. Most problems in the world, from energy to logistics, are becoming big data problems.
Wall street refers to Palantir as a glorified consulting firm, buying revenue from SPACs, doesn't have a product that can scale...list goes on.
Wall street thought tesla couldn't make their cars affordable, was only profitable because of subsidies, had a CEO that wasn't focused...list goes on.
Their CEO's & Their Vision
Elon Musk and Alex Karp are eccentric in their own ways.
Elon spends his time on twitter, tweeting at the Russian government, retweeting memes, and responding to retail investors like he's one of their friends.
Alex Karp does not have a twitter (and likely couldn't pull off what Elon does due to Palantir's intimate relationship with the government) but speaks philosophically in every interview, usually goes on tangential rants, drops the f bomb in an earnings call, and is confidently arrogant around how smart one needs to truly be to actually invest in Palantir.
In the context of retail, both companies have CEOs that seem to attract the attention of the masses. While wall street analysts are often put off by the arrogance and meme-like culture that both CEOs represent, retail investors feel more connected to the CEOs.
It's almost like retail investors can relate better to the CEOs and compelled by their vision because they are less like "suits" and more like regular people.
Big visions - whether its transforming the world to sustainable energy or protecting western values - cannot be communicated effectively by a suit. At least not effectively enough to get millions of people to believe or care.
Focus On Product Over Sales
Tesla spends zero dollars on marketing. Palantir originally spent zero dollars on sales and marketing (that has now changed and they are ramping up their salesforce).
Regardless of the money that is now being spent on sales, the argument here is that both companies are obsessed with product.
Tesla wants to make the best car. They know people will buy their car if they just make the best one.
Palantir wants to create the best data analytics platform. Unlike Tesla, Palantir knows they have to engage in sales since they are within the B2B enterprise software space and not the consumer space - but their product is strong enough to stick within a client after they close the deal, which is why their net dollar retention is 143%.
Since both companies focus on product, they end up making products that are highly differentiated from their competitors.
Palantir has a lot more to prove, but there's a reason they are one of the only firms that have level 5 clearance with the Department of Defense. Tesla has a car that feels like a rocket ship. Both companies invest into their product and recognize the value in being in a league where there is no real competition, and eventually want to capitalize (Tesla has done this very well) on the monopoly of the product only they can create.
Overall, Tesla & Palantir are two phenomenal companies. Time will tell how the market treats them and their valuations - but for now - retail is on their side, and doesn't seem like they are leaving anytime soon.
You can watch a video of me comparing both companies here.