Palantir Technologies Inc (PLTR)

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Palantir’s SPAC Bets Backfire, Hitting Company’s Growth
By: WSJ | December 22, 2022

• Unusual deals boosted growth but are now a risk to software maker

Palantir PLTR Technologies Inc. helped fuel the SPAC boom with an unusual strategy. The data-analysis company invested more than $400 million in startups that simultaneously signed deals to buy Palantir’s software. Palantir got a surge of revenue growth that it trumpeted to investors.

The bets have backfired.

Palantir’s 20 startup investments, which include a flying-taxi company and numerous electric-vehicle startups, are down more than 80% on average. One has gone bankrupt and one has been delisted from the New York Stock Exchange. More than half are warning they may go bust.

Palantir, co-founded by Peter Thiel in 2003, has stopped doing such investments. Growth has slowed and its stock is down more than 60% this year.

The results make Palantir a high-profile casualty of the boom-turned-bust in special-purpose acquisition companies, which surged as an alternative public-listing technique the past few years. They are now dealing losses to a wide range of investors including venture capitalist Chamath Palihapitiya and BlackRock Inc.

“The market has turned and it is now clear that these investments were unsuccessful,” a Palantir spokeswoman said in a statement. “It was a bet on a group of early stage companies that, with the benefit of hindsight, we wish we did not make.”

Palantir’s approach is inviting particular criticism. It often made investments in companies then signed revenue contracts similar in size. Some deals called for the startups to pay Palantir back large chunks of the investment within days of receiving the money.

“It seems to be a pay-for-revenue strategy that’s not only not working but like there maybe should be some more regulation around this,” said Matt Simpson, managing partner at Wealthspring Capital and a SPAC investor who typically pulls money out before deals are completed. He said Palantir’s participation in some deals gave investors confidence to back the startups and could have contributed to others losing money.

Short sellers betting on Palantir shares to fall have made more than $1 billion in paper profits this year, according to data-analytics company S3 Partners...

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