Palantir moves toward stock listing with confidential filing

Palantir Technologies Inc. said it filed confidentially with U.S. regulators for a public stock listing, taking a major step toward a market debut that has been many years in the making.

The secretive Silicon Valley company, which sells data analysis software used by governments and large companies worldwide, is seeking to go public by the fall, Bloomberg previously reported, though the timing could change.

Palantir has been weighing a direct listing of its shares on an exchange against an initial public offering, people with knowledge of the deliberations have said.

The company said in a statement Monday that it had filed with the U.S. Securities and Exchange Commission for a “public listing” of its stock, wording that has been used by other companies planning to pursue a direct listing. Such announcements typically specify a company is planning an IPO when that is the case. Palantir may still decide to pursue a traditional IPO to raise capital for the business.

Palantir is in the process of raising $961 million, $550 million of which it has already secured, according to a filing earlier this month with the SEC. That includes a $500-million investment from Sompo Japan Nipponkoa Holdings Inc. and $50 million from Fujitsu Ltd.

Those sums make listing the stock directly a more accessible path for Palantir, following in the footsteps of Spotify Technology SA and Slack Technologies Inc.

A direct listing wouldn’t let Palantir raise money by issuing new shares, but it would allow it to bypass an investor roadshow and other formalities of an IPO, while letting current stockholders sell their shares at the opening bell rather than waiting until the end of a lock-up period.

Billionaire Peter Thiel founded Palantir in 2003 with a group of business partners including Alex Karp, the chief executive. In 2015, Palantir reached a valuation of $20 billion, though in recent years stockholders have sold blocks of shares for much less. It isn’t clear what valuation the company would seek in going public.

The company told investors this year that it expects to break even in 2020 on revenue of about $1 billion.

In June, Palantir added three directors including the first woman to serve on its board, former Wall Street Journal reporter Alexandra Wolfe Schiff.

Dozens of law enforcement and government agencies around the world use Palantir to compile and search for data on citizens with the intent of combating crime, hunting terrorists and in recent months, tracking the spread of COVID-19. The pandemic has boosted business as companies use its products to help determine how to reopen.

However, Palantir is highly controversial for the way its tools have been used to compromise privacy and enable surveillance. Its use by police and immigration officials, in particular, has sparked numerous protests.

The Palo Alto-based company had long resisted a public offering to avoid getting valued as a consultancy, and to stay out of the public eye as it worked toward profitability, people familiar with the matter have said.

Its dependence on engineers customizing software for each client and bloated cost structure also resulted in consistent annual losses. That heightened the possibility that it wouldn’t be valued as a software company despite its Silicon Valley credentials.

That changed last year, with customers using a new more automated product that has put Palantir on the path toward profitability.

Palantir’s funders include Founders Fund, the venture capital firm started by Thiel. Other investors include Morgan Stanley, BlackRock Inc. and Tiger Global Management.

Thiel, a co-founder of PayPal Holdings Inc., has helped launch or advance Silicon Valley firms including Facebook Inc., where he has been a board member since 2004. Through Founders Fund and other investments, his influence has been extended to an array of technology companies. Thiel has also served as an advisor to President Trump, chastising other technology companies, in particular Alphabet Inc.’s Google, for their reluctance to work with the Defense Department.