YOLO Traders Are Mad That Surveillance Giant Palantir Isn’t Making Them Rich

Retail traders on Reddit are banking on the surveillance company’s success even as its stock has struggled for the past few months.
June 2, 2021, 2:59pm
YOLO Traders Are Mad That Surveillance Giant Palantir Isn't Making Them Rich
Screengrab: Youtube

Much has been written about the horde of traders convening in the Wall Street Bets subreddit to pump GameStop’s stock earlier this year, but there’s a darker, less examined side of the so-called “YOLO” phenomenon that goes beyond movie theatres, video game retailers, and shiba inu-themed cryptocurrency: rooting for surveillance startup Palantir as it enables ICE deportations and expands its hoard of government contracts.

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Palantir, which was co-founded by reactionary billionaire Peter Thiel and self-professed progressive Alex Karp (“Papa Karp” in the subreddit) in 2003, has for well over six months been a darling of the Wall Street Bets (WSB) community. After debuting at around $10 in late September, the stock has gone as high as $45 and currently sits at around $23, with most analysts putting their target price at that level.

In November, short seller Citron Research tweeted that Palantir was "no longer a stock but a full casino" as the company was valued at $50 billion, about 50 times its projected 2020 revenue. Though the stock closed at $27.66 that Friday, Citron announced it was shorting the stock with a $20 price target. Citron Research is, of course, the infamous short seller that helped spark the GameStop spectacle by attracting the WSB subreddit's ire as it proudly announced it was shorting the company, only to change its tune ten days later as the stock surged and its positions began to bleed cash profusely.

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The subreddit, which had already been watching Palantir’s stock, flew into a frenzy and doubled down to pump the stock price and also make “Shitron” lose money on the short. In December, a poster going by “jagyolo” began a series of trades that they claimed culminated in a Palantir position of just over $1 million featuring stocks and options, then exited at $36 for a $100,000 gain. 

By February, Palantir’s stock was up 236 percent from its closing price on Palantir’s first trading day. But disappointing fourth-quarter results and the expiration of a post-IPO lockup on 383 million Palantir shares led to a massive selloff. 

Now, traders are eating losses and expressing frustration as to why investing in the stock of a company that vastly expands the surveillance dragnets available to police officers, helps detain migrants, and powers ICE raids that terrorize communities, isn’t making them fabulously wealthy. Over the past six months, there have been countless other posts featuring losses that are at least tens of thousands of dollars (hundreds of thousands of dollars for some) from community members who bought in too high as Palantir’s price plummeted. 

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“I’m not concerned with contracts they have which may be perceived or viewed as negative,” u/Krrtis told Motherboard. “At the end of the day, it’s a company, and it’s a companies [sic] job to make money. I don’t think this company has bad morals behind it, but it’s the job of the business to find contracts with businesses that have data complications. Some of these contracts like the ones you mentioned may feel grey but from an investment perspective the only thing I really care [about] right now is 1. They are finding more contracts, 2. They continue to show dominance in the data field.”

One user, u/watchthetides, bragged that he poured over $272,000 into Palantir stock―his 401k, his wife's 401k, and their retirement savings. “Yolo’d my 401k inheritance, my wife’s 401k, and savings on a retirement plan,” they titled the post. A week after their initial post, they confessed that their losses were so bad because on the day of investing they were down $20,000 and decided to double down. "I failed to take my defeat and walk," they added. "I couldn't stomach it. Went from bad to worst every day."

Another user, u/yummynothing, shared he was postponing his marriage and house purchase thanks to just over $31,000 in losses from options in Palantir and DermaTech. A few other users expressed sympathy. "I can relate to this 100%. A month ago I had 50k extra to put down on a house. Today I am back to my original 25k," one subreddit regular said. Another claimed that they were up $60,000 from the GameStop rally but were down to $400 now, with $40,000 of that loss coming from bad GameStop options.

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u/yummynothing updated Motherboard on his position in a direct message, sharing that from December to now he’s bought and sold some 1600 shares for $12,000 in profit but “am still holding about almost 2000 shares that I intend to hold for next 3-5 years.” He’s broken even as of today, with Palantir’s price briefly hitting $24.75 (his cost basis was $24.48). Still, he told Motherboard that “I won’t be surprised if it goes down even further” due to the stock’s past volatility.

A number of WSB posters claim to have begun to see gains like u/yummynothing thanks to a slow climb in the last several weeks, or otherwise profess their determination to keep holding. One user messaged Motherboard that the stock “is going up now, diamond hands homie 🙌🏾🙌🏾💎💎👊🏾👊🏾”.

Why―beyond the adrenaline rush of gambling or the promise of quick money―are people so eager to throw in their lot with Palantir, bragging about “diamond hands” even as losses pile up? The community is convinced that the stock can only go up despite the millions of dollars in losses they've apparently cumulatively incurred because Palantir is consistently securing new contracts or extending older ones with the federal government. Besides “loss porn,” Some of the most heavily up-voted posts concerning Palantir contain news of new federal contracts or “technical analysis” offered by community members trying to make sense of the company’s moves.

“My analysis of PLTR comes from my knowledge as a programmer and I just firmly believe they are a solid long-term hold,” user “Krrtis,” who posts price chart analyses to WSB, told Motherboard. “The main analysis for me comes from how they are able to provide clients with a sleek way to monitor,review, and improve areas of business by linking all the data stores of the business together and taking initiative to find data problems which translate to real business problems.”

Palantir’s chief executive has himself said Palantir isn’t exactly the ideal short-term opportunity for speculation. In one interview with CNBC after the company's IPO, Karp was asked about how he felt about the attention retail traders (like those at r/WSB) were giving the company. "I like so-called retail investors for lots of reasons. I'm very proud that normal people, investing their own money, with their own risk, making their own opinion, made a lot of money." 

However, Karp was clear to point out that he didn't think it made sense for Palantir. "We're in this for the long haul. If you are speculating or you're thinking about this short-term, there are plenty of other things to invest in. If you want something else, it's a huge world. Buy some other stock. You don't have to buy Palantir."

Notably, Palantir itself warned investors in its S-1 filing that public perception of its business contracts may harm the company due to damaging information being reported in the media. Most of the long-term investors Motherboard talked to were unconcerned with any controversy the stock might garner from its contracts to help ICE target, detain, and deport migrants or to build expansive surveillance networks for police departments across the country, however.