“We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies.”

Palantir S-1 Prospectus

On February 24th, Russia invaded Ukraine. As FDR once said, “a date which will live in infamy.” Vladimir Putin is no longer a thuggish dictator, but now a full-fledged war criminal, who will be ostracized from the global community. The global landscape has changed. Everything has changed.

Watching the horrific scenes in Kyiv, I start to realize how lucky I was to be born in a democratic country. All of us have problems, but nothing like that of those that live in an authoritarian country where the meaning of freedom and liberty are much different.

We now have a true declaration of war. This war won’t be fought on the battlefield but in cyberspace. The U.S military is significantly stronger than Russia. When you add the U.S and all of its allies vs Russia, it isn’t even close. Russia knows this but closes the gap with a formidable hacking network where they can inflict massive cyberattacks that can cause large-scale damage.

The recent attack forever changed U.S. relations with Russia and Europe. Preserving western democracy through cybersecurity and focusing on national defense will be a much higher priority for the U.S. and its allies. I see Palantir, a stock that thrives in chaos, as a big beneficiary from the Russia-Ukraine war.

What is Palantir?

The company leverages machine learning and data analysis algorithms to detect unusual or suspicious patterns in large data sets in order to identify, predict, and report conclusions and outcomes. These products and services enable organizations to collect data, process data, analyze data, and use patterns and connections from the analysis to make better operational decisions and predict outcomes.

What is Palantir? Palantir Explained

How does this relate to cybersecurity?

At Palantir, we’re passionate about solving real-world problems. Our software has been used to stop terrorist attacks, develop new medicines, gain an edge in global financial markets, combat child trafficking, and more.

InfoSec at Palantir

How is the company performing?

Palantir expanded its commercial business throughout 2021, with revenue up 34% year over year to $645 million. U.S. commercial revenue alone soared 102% with the customer count jumping 4.7 times to 80. In 2021, government revenue gained 47% to $897 million.

Palantir shares drop more than 15% after earnings

Palantir was founded in 2003 and focused mainly on government contracts. They only recently entered into the commercial space, which makes it the faster-growing segment of their business. Palantir is unique in that they focused on government customers, which is a much more difficult space to grow as a business. Commercial contracts are governed by state law and are much fairer and equal between both parties. Government contracts favor the government for obvious reasons. They have unique powers that a private or publicly-traded business would never have. There is just so much red tape and bureaucracy with government contracts, it becomes an unattractive business model for revenue growth. It makes a lot of sense why Palantir ramped up on hiring sales reps to increase their commercial clientele list.

The invasion changes everything. Government contracts could boom for Palantir. All allies of the U.S. could bolster spending on defense to protect themselves from the Chinese, Russian, and North Korean hacking armies. Germany just recently ramped up its defense spending above 2% of its gross domestic product. German Chancellor Olaf Scholz said during a special session of the Bundestag, “it has become clear that we need to invest significantly more in the security of our country, in order to protect our freedom and our democracy.” Cyberwarfare is upon us and cybersecurity has become an urgent need. Companies like Palo Alto Networks, Crowdflare, Crowdstrike could all benefit, but I like Palantir the most because they are not confined to just the cybersecurity space. They analyze complicated data-driven problems and synthesize large data sets in a much more organized way. That market fits into a lot of different industries, which creates a large total addressable market.

Most investors and analysts assume the reason to invest in Palantir is because of their future growth in the commercial space. It has been assumed that government contracts are slowing down. With the recent geopolitical events, maybe Palantir’s government business is just starting to accelerate, which makes the stock price very attractive at these levels. They already have their foot in the door, so if the demand for more government contracts does increase, Palantir can deliver on that addressable need.

If Palantir grows its revenue at an average rate of 20-30% over the following 10 years, the stock is most likely an 8-12 bagger with a market cap of $400-500 billion. If Palantir grows its revenue at an average rate of 30-40% over the following 10 years, its market cap could be closer to $1 trillion. In that ultra bull-case scenario, this stock is a potential 100 bagger, in the same class as Microsoft, Google, and Tesla. With some luck and conviction, I am holding my shares through a shaky and volatile market. I could accept the pain if the stock price went to zero. I could not accept the regret if Palantir became a superstock and I did not own it.

“The best way to predict the future is to create it.”

Abraham Lincoln, 16th president of the United States