Palantir and Asana Impress on Their Market Debuts

By Adriaan Brits Friday, October 2, 2020

Software company Palantir and work manager app Asana have both made impressive stock market debuts. Their debuts have proven that investors are hungry for new stocks that can provide value over the long-term.

Palantir Makes a Much-Awaited Debut

Palantir, which is known for making data-sifting software for government agencies, managed to fetch a rather elevated market value given that it’s a firm that has never made a profit and relies on public agencies for almost half of its business.

The company has picked up a market value of almost $22 billion in its much-anticipated market debut on the New York Stock Exchange (NYSE). The Denver-based tech company said the demand for their software “has never been greater.”

Palantir started operating in 2003, supported by right-wing libertarian tech investor Peter Thiel and the US Central Intelligence Agency (CIA) at the time. The company makes software that integrates massive data sets and produces user-friendly connections and patterns.

After its launch, Palantir supplied US soldiers in Iraq and Afghanistan with its technology and now makes software for police departments, corporate clients, and other public agencies. Palantir operates in over 150 countries, including the United Kingdom, which wanted to hire Palantir to help fight coronavirus this spring.

Palantir’s revenue advanced 49% year-over-year in the first half of 2020, compared to $480 million from the year-ago period. At its market debut on Wednesday, Palantir’s shares opened at $10 apiece, up from its $7.25 reference price.

Mark Cash, an equity research analyst at Morningstar, who has estimated Palantir’s market value at $28 billion, even more than the figure fetched yesterday, said the company is in a great position in a developing industry.

"Data integration at this scale for the government is very complex and I think if you tried to stop spending on that and it just goes away, you're going to have some big problems," Cash said. "We think it's very hard to switch away from once you're in as a customer."

Prior to Palantir’s debut, Amnesty International released a report saying Palantir failed to protect human rights with poor due diligence into who it is working for.

"We have to move away from the idea that data analytics and data collection is objective or clean or immune from all the pathologies that we're seeing play out right now," said Paromita Shah, executive director at Just Futures Law.

"Our governments are the problem because they don't want to set up oversight, but Palantir takes advantage of it."

Asana Stock Races Higher

A work manager app Asana has fetched a market value of over $4 billion in its market debut on the New York Stock Exchange. Asana, founded in 2008 by Dustin Moskowitz, a co-founder of Facebook, and former Google and Facebook engineer Justin Rosenstein, debuted through direct listing instead of a traditional initial public offering (IPO).

The workplace software maker opened at $27 a share and closed at $28.80, higher than the reference price of $21 set by the NYSE. Before its debut, Asana’s stock had traded in a private market at a weighted average price of $25.11 per share in August.

The public offering comes after the Asana app that clients use to track and organize their work proved very useful to consumers during the coronavirus pandemic, said Asana’s co-founder and CEO, Dustin Moskovitz.

“All these companies are moving to remote work for the first time, getting that clarity has become an ever more important business imperative. We’re well-matched to the moment,” Moskovitz said in a telephone interview.

Investors are able to sell their shares directly to the market in a direct listing. Also, the selling price of shares is not affected by input from underwriting banks, given frequent criticism that shares in a traditional public offering are underpriced. In a direct listing, companies cannot raise capital.

“In a traditional IPO where the underwriters may be pricing it at a particular price and then you see a 20%, 30% or sometimes even 50% increase in the stock, as the CFO you’re thinking, are you leaving money on the table?” Tim Wan, the CFO of Asana, said.

“In a direct listing you don’t have that phenomenon and you’re not raising money. You don’t feel like you’re leaving money on the table.”

Summary

Palantir Technologies conveyed a market value of nearly $22 billion in its public offering debut on the NYSE. Similarly, the workplace software-maker Asana also debuted on the NYSE and fetched a market value of $4 billion.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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