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Matt Phillips

New high for Palantir shares

Palantir Technologies, the data mining, defense, and intelligence software firm cofounded by politically connected right-wing billionaire Peter Thiel — is on track for a new record high on Friday, suggesting either increased optimism around its earnings results due after the close of trading on Monday, or growing confidence that financial fundamentals are passé when it comes to companies close to the Trump administration. Perhaps both.

Palantir was the best-performing stock in the S&P 500 last year, rising 340.5%, a gain that’s put a valuation on the shares — price-to-sales multiple of more than 50x and a price-to-forward earnings ratio of 180x — that makes no sense according to any traditional valuation model.

In this sense, the company is a bit like Tesla, a stock that is, according to traditional metrics, so insanely overvalued as to provoke a sort of crisis in confidence among Wall Street analysts who are increasingly willing to publicly confess that they can’t understand why the shares of this faltering car company continue to rise.

For what it’s worth, the good folks over at the Financial Times seem able to see and state clearly what’s going on, at least when it comes to Tesla. It’s the politics, stupid.

The election of Donald Trump — which Elon Musk spent the relative pittance of $250 million to make a reality — coincided with an explosive move higher for Tesla shares, which can reasonably be interpreted as the market pricing in a business windfall resulting from Elon Musk is a de facto member of the administration.

Thiel — the cofounder and largest individual shareholder in Palantir — also has unusually close links to Trumpworld, having once employed the Vice President JD Vance and helped bankroll his run for the US Senate. The trajectory of Palantir likewise angled sharply higher after the election. In fact, the stock has literally doubled since November 4, the day before the vote.

From an investment perspective, this could be pretty rational, especially since the US government is Palantir’s single largest customer. From an optics perspective, though, the specter of the stock market pricing in Trump-premium for politically connected companies feels a bit grimy.

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