Palantir polarizes investors; they either hate or love the company. Peruse any SeekingAlpha article about it, and you will see strong bulls and strong bears. Each with equal conviction. Recently, Palantir’s movement into SPACs made waves with accusations of “paying for revenue” on one side and “strong strategic moves to continue growth well into the future” on the other. So, what’s the truth?
Today we will examine three strategic investments and how they help us understand Palantir’s future.
Data as a Service
Palantir’s tools enable companies to manage, analyze, and employ their data. Whether importing and cleaning unstructured data sets or training an AI model for decision making, they sit at a prized place in the software stack. Agnostic to the type of industry the data comes from, Palantir has the flexibility to grow into multiple sectors of the economy as they scale.
Palantir made three important investments in time, money, and partnerships in the past year: Sarcos Robotics, Lilium, and Wejo.
Sarcos Robotics builds exoskeletons and unmanned robots for industrial work. Exoskeletons increase occupational safety, worker strength, and effectiveness. They also can act as a platform to gather data. Imagine a worker with an exoskeleton on for strength, stability, and protection inspecting a mine. That worker controls a series of unmanned vehicles using control systems built into the exoskeleton to inspect a rockfall. Unmanned robots enhance the effectiveness of the exoskeleton wearing worker by accomplishing dangerous, tedious and repetitive industrial actions. The mine control center receives real-time updates from the worker and makes immediate decisions about getting the mine back to work. The physical robotics of Sarcos built on the data architecture and software stack of Palantir could be a potent combination.
Lilium, a competitor in aerial transportation services, builds electric vertical takeoff and landing aircraft (eVTOL). It seeks to enable high-speed regional air mobility and advertises an airframe with six passengers and a range of 155 miles. By partnering with Palantir, Lilium gains access to critical software such as Palantir’s Foundry, a commercial enterprise offering. The eVTOL functionality means that the Lilium Jet does not require a runway to take off and land, or a supply chain for bulk fuel and storage. As with Sarcos exoskeletons, it can mount plenty of sensors that collect data to improve transportation network performance through machine learning and artificial intelligence.
Wejo is a Connected Vehicle Data company. According to advertisements, it collects data from over 11 million vehicles every day and has over 10.1 trillion data points. To control that much data requires significant processing, and to mine it into something usable… it helps to have Palantir. Therefore, Wejo and Palantir partnered to create an integrated data ecosystem and “ignite a mobility revolution.” This ecosystem will enable Wejo to monetize its data to help build smart cities, reduce emissions, and provide insights into traffic patterns worldwide.
How can Palantir and these three companies’ technologies create value in the future? To illustrate what could be, we will examine use cases for three companies that Palantir currently has contracts with.
Future Use Cases
Rio Tinto, an international mining company, started operations in the 1800s. It supplies raw materials such as copper and iron ores that fuel the modern economy. In January of 2021, Rio and Palantir signed a multi-year contract to digitize Rio Tinto, transforming it into a data-driven enterprise. By integrating Palantir into its operations, Rio can create digital twins of each piece of its business model, from individual mining trucks to entire mining complexes. By piping in evergreen data such as refinery inputs or mine outputs, executives can understand their company in real-time. Imagine if Rio began to use Sarcos exoskeletons and robots to protect its workers, automate data collection, and improve margins through better efficiency. Next, envision an integrated network of robots connected to a central control node at each mine. That mine connects to a regional control node and on to the international hub. By creating a hub and spoke method of data collection, down to individual equipment, Rio can discover inefficiencies and better forecast shortfalls and surpluses.
BP, an oil company, signed a new deal with Palantir in February of 2021 to help them decarbonize. Palantir can help them using their own software and the same Sarcos robots that enabled Rio in the paragraph above. Let’s add on another layer.
BP needs to know the best places to put gas stations today and the best places to convert gas stations to electric vehicle charging stations in the future. It builds massive solar projects worldwide and would probably like to optimize solar project locations as well. How should they do that? Wejo’s data would be perfect to understand where to optimally position themselves for the future. As BP provides the energy that enables mobility, it will be imperative to invest in assets at the right place at the right time. Not all regions will decarbonize at the same time due to climate, political, and economic differences. Anchorage, Alaska, will probably be the last to go full EV because in the winter… there is no sun for solar panels. Conversely, the route between Los Angeles and Las Vegas would be perfect for BP electric vehicle charging stations and solar panel projects. Quantifying potential customer bases precisely with Wejo would be a competitive edge.
PG&E is the California utility company everyone loves to hate. Regardless of your stance on them, they use Palantir too. PG&E could use Sarcos Robotics and Wejo to improve efficiency at their worksites and understand where EV power requirements will be highest based on car usage data. But there’s another layer. PG&E needs to move its work crews from centralized locations to areas around the state for work. How do they do this? By sitting in gas-guzzling trucks in traffic. That waiting time costs the company money. What if they could skip the gridlock and fly teams of six, plus one pilot, from centralized locations to areas further away from their hubs? Enter Lilium. PG&E could use its eVTOL capability to gain mobility for their crews, especially workers who have high-value skill sets. PG&E could revolutionize their business by getting their crews on site faster and charging their eVTOL planes from their own solar arrays at centralized points.
Palantir’s long-term vision is impressive in its breadth and depth. Their ability to add value to businesses will only grow as the companies they invest in mature. Read more of our Palantir analysis here.
If you are bullish on this thesis, consider going long in Palantir.
If you are bearish on this thesis, you can short Palantir.
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I am not a financial advisor. This article is for educational purposes only. You should do your own independent research before making any investment decisions.