Palantir to go public in direct listing
Palantir is expected to make its market debut on Wednesday using the ticker PLTR and, according to the Wall Street Journal, has an estimated valuation of $22 billion. Yahoo Finance’s Ines Ferre joins The Final Round panel to discuss the debut of the elusive company and what means for the economy.
Video Transcript
SEANA SMITH: Welcome back to The Final Round here on Yahoo Finance. It's been a strong quarter for traditional IPOs, and also direct listings. We've got some big names on deck this week. Palantir is one of them. It's scheduled to begin trading tomorrow on the New York Stock Exchange under the ticker PLTR. Ines, I know you're looking into this. What can we expect tomorrow? And also, I mean, the big question is whether or not it's going to live up to the hype.
INES FERRE: Yes. Well, this is not a traditional IPO. So in an IPO, you have an IPO price for shares. In this case, you have a reference price. And right now for Palantir, the reference price is $9.29 a share. But that could change tonight. The number that's been floated earlier today was perhaps $10 a share.
Now as far as the valuation for the company, this could value the company at around $22 billion. MKM Partners had put out a note recently basically estimating that the company is valued at anywhere between $20.8 billion and $22.3 billion. And Morningstar had put out a note also, estimating that Palantir could be valued at around $28 billion. And a key takeaway from that Morningstar note was also the current addressable market that Palantir says it has. Palantir says that the TAM, total addressable market, could be $119 billion, but Morningstar is saying that right now it's more around $20 billion.
Could it live up to the hype? That is, of course, what everyone is wondering as far as this direct listing is concerned. It will be closely watched, along with Asana as well.
SEANA SMITH: Well, Ines, one of the things that's getting a lot of attention, of course, the Street is watching as well, is the share structure and the voting power. We've talked a lot about this over the last week or two. But when we talk about the class F shares, that is what I think is really at issue here. And that's the stock for the founders. This class of stock has caused some confusion just in terms of the power, I guess, that the founders will continue to have over the company. What can you tell us about that, and just in terms of whether or not that could deter investors here?
INES FERRE: Yeah. I mean, this is going to give voting power to the founders, regardless of, really, how many shares, because they have-- as you mentioned-- these class F shares. And Palantir has been amending its S-1 filing over the last couple of weeks since it dropped its filing, to kind of explain this voting structure. And in one of the latest ones it says that the founders and their affiliates will have up to approximately 49.999% of voting power, and that the executive officers and directors and affiliates will have approximately 50.8% of voting power.
Well, where does retail investors come into this? Retail investors, class A common stock-- because there's class A, class B, and then those F shares-- class A could hold approximately 3.4% of voting power. TechCrunch had a great write-up on it with Danny Creighton talking about this. Basically, in the most extreme scenario, this would give the founders control of 68.099% of the company's vote while owning just half a percent of the company's shares.
Also, the company could issue new shares in the future, and it could, of course, also issue-- it says that in the future, it could create a new class of equity securities. So definitely, the power is in those founders.
SEANA SMITH: All right, Ines. Well, Palantir, scheduled to start trading tomorrow under the ticker PLTR. Of course, we will be closely watching the debut.
