Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Palantir investors missed Fast Radius bankruptcy news - William Blair

Published 11/15/2022, 02:30 AM
Updated 11/15/2022, 02:30 AM
© Reuters

© Reuters

By Sam Boughedda

In a note to clients on Monday, William Blair claimed that most Palantir Technologies Inc (NYSE:PLTR) investors missed the news that Fast Radius Inc (NASDAQ:FSRD) filed for bankruptcy.

Fast Radius is a startup provider of advanced manufacturing services based in Chicago and is one of the 21 publicly traded companies for which Palantir provided SPAC PIPE equity funding in connection with the recipients of the funding signing multiyear software license agreements with Palantir, said William Blair analysts, who have an Underperform rating on Palantir shares.

"In May 2021, Fast Radius entered a $45 million/six-year software agreement with Palantir in connection with Palantir, investing $20 million for 2 million shares of Fast Radius’s equity. As a result, there is the potential that Fast Radius’s estimated $9 million annual revenue contribution goes away if the company stops paying Palantir," explained the analysts.

"Beyond Fast Radius, there is the potential for downside pressure if other strategic investments falter. As of Friday’s close, according to our calculations, the average strategic investment is down 82% from Palantir’s purchase price. Most of these strategic investment contracts contain termination provisions. Palantir recognized $28.1 million in revenue from its strategic investments in the September quarter, down from $39.2 million in the March quarter. Overall, revenue from these strategic investments composes roughly 5% of total revenue. We believe that the churn of such strategic revenue could be detrimental to Palantir’s profit margins," they added.

As a result, William Blair is incrementally negative on Palantir, and they expect Palantir shares to trend lower over the next 12 months on growth and margin pressure, with a potential downside to $5 to $6 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.