The Palantir IPO could happen in 2016. As anticipation builds, one of the questions we keep hearing from investors is, "What is Palantir?"
News last week that Palantir had raised $450 million in private funding only stoked investors' excitement. That's because the company is now valued at $20 billion after raising a total of $1.5 billion.
So exactly what is Palantir? Here's your full answer...
What Is Palantir and What Does the Company Do?
Palantir Technologies Inc. is a software company that was founded in Palo Alto, Calif., in 2004. The company analyzes massive amounts of data and sorts through it for its clients, who are typically looking for problem areas in their business.
The company was initially focused on preventing cyber-attacks, but it also helps clients avoid fraud and other crimes. Users enter questions in natural language - like, "How do you prevent insurance fraud?" - and Palantir's software sifts through all applicable data.
The company's clients are typically government agencies, financial institutions, and legal research firms. Since 2009, the company has received more than $215 million in contracts from the U.S. Department of Defense, the CIA, the FBI, Homeland Security, and the NSA.
Palantir was founded by Peter Thiel, Alex Karp, Joe Lonsdale, Stephen Cohen, and Nathan Gettings. Karp is now the firm's CEO, while Thiel remains the largest shareholder.
In 2013, Karp announced that he was not pursuing a Palantir IPO and would instead continue to raise money privately. This is a common refrain we've heard from tech startups, who typically resist putting a timetable on their IPO plans.
According to The Wall Street Journal, Palantir has received funding from nine different investors through eight rounds of funding.
While the Palantir IPO date may not be announced until 2016, investors are still wondering whether they should invest in Palantir stock when it hits the market. Here's what you need to know...
Should I Invest in the Palantir IPO?
Money Morning Defense & Tech Specialist Michael A. Robinson has been talking about the potential of the Big Data industry for years.
"Big Data is the 'answer' to the question: How do we make sense out of the overwhelming amount of data we're generating in the Information Age?" Robinson said in May 2014. "Big Data is a field in which computers crunch through massive amounts of unstructured data to look for things like online fraud or to make strategic predictions about market growth."
Investing in "unstoppable trends" like Big Data is one of the best ways to amass meaningful wealth.
But that doesn't mean investors should flock to Palantir stock the second it hits the market.
We recommend waiting several months before investing in any new IPO stock.
You see, popular IPOs are usually reserved for institutional investors willing to buy huge quantities of the stock. That makes it almost impossible for investors to get in at the IPO price.
If the stock soars in its debut, then retail investors are buying in at that inflated price and paying a huge premium.
Not to mention most of these deals are accompanied by hype that overshadows the facts.
"Too many investors hear of a 'hot IPO' and try to get in on the action without doing any homework at all," Robinson said. "That's a recipe for a hefty loss."
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How to Safely Profit from Any IPO: Investing in newly issued stocks can seem like an exciting way to earn huge profits. But with institutional investors and other Wall Street "VIPs" cheating the market for quick gains, the IPO process is a rigged game nowadays. That's why we've outlined the three best IPO investing rules to follow for any new stock. Check them out here...