Palantir Inks Huge Deal with PG&E

Disclaimer: This post does not constitute financial advice. Author has no position in Palantir or PG&E. Do your own due diligence before making an investment.

Palantir today announced they will be partnering with the largest utility provider in the United States, PG&E.

PG&E will be using Palantir’s data solutions to help make decisions regarding its Public Safety Power Shutoff program. Data will help to mitigate the risk of wildfires, and other future projects.

“Our engagement with California’s largest investor-owned utility underlines our commitment to increasing safety and reliability for customers and communities across the region,” said Olivier Farache, Palantir’s Head of Utility Sector. “It shows our Foundry software can power data-driven decisions that aim to improve service delivery.”

This was a multi-million-dollar contract that was signed for multiple years. While not a huge sum of money considering they have a market cap of 50 billion, it does represent a proof-of-concept. When a major player adopts your technology, it’s reasonable to assume that others will follow suit.

Palantir could land contracts with other utility providers in other states and countries. But their data isn’t just limited to utilities. They see their data solutions helping in a multitude of other areas, like vehicle safety, pharmaceuticals, and defense against terrorism.

Last week, Jefferies analyst Brent Thill raised his price target on Palantir from $18 to $30. He sees 30% growth coming over the next few years, as well as over a billion dollars in revenue.

Palantir’s revenue grew approximately 25% from 2018 to 2019.

Here’s a look at the chart.

Their initial IPO reference point was $7.25. The stock opened at $10. Since then it’s up about 270%. Pretty remarkable!

The one-month chart isn’t as pretty.

Over the last few months, Palantir has spiked to $30ish several times, but has retreated by as much as 13%. These early IPO companies can be quite volatile. Watch your stops if you’re going in deep. Palantir looks like the type of stock that could rally to $100 in six months, or get crushed back $10 just as fast.

It might be good choice for a straddle/strangle play. Unfortunately the IV on this thing is pretty nuts. Short term options IV is cruising around 125%. Even the leaps are expensive. You’re looking at 90%+ on the January 2022’s.

Tread carefully. This one looks like a better equity pick than an options pick.