Palantir abandons $50 million gold investment two years after buying bullion


Alex Karp, CEO of Palantir, during day two of the World Economic Forum in Davos, Switzerland.

Stefan Wermuth | Bloomberg | Getty Images

As of August 2021, Data Analytics Software Provider Palantize purchased over $50 million worth of 100 ounce gold bars. Less than two years later, Palantir has said goodbye to the precious metal.

“During the three months ended March 31, 2023, the company sold all of its gold bullion for total proceeds of $51.1 million,” Palantir said in its first quarter financial filing on Tuesday. The company said the sale resulted in “an immaterial realized gain” on its income statement.

At the time of Palantir’s investment in gold, the market was in a very different situation. Stocks were months away from peaking, crypto was flying high, and interest rates were near zero. Other tech companies were pouring money into equity investments and even bitcoin, but Palantir chose a more conservative path to park some of its extra cash.

Palantir did not say at the time why it was buying gold, noting only that the bullion was “located in the Northeastern United States” and that the company could “physically take possession of the gold bullion stored at the facility at any time upon reasonable notice”.

In his last depositthe company gave no explanation for the reasons for the sale, and a spokesperson did not immediately respond to a request for comment.

To hedge against inflation, Palantir made a wise bet.

Food and energy prices, which were already on the rise in mid-2021, climbed until mid-2022, with the year-on-year consumer price index peaking at 9.1% in June . That number has since declined steadily, reaching 4.9% last month, the slowest pace since April 2021.

Gold prices are up more than 12% since the start of August 2021, while the S&P 500 has fallen around 6% over the same period.

But gold as an alternative to cash is losing its appeal for many investors in a rising interest rate environment, as there is suddenly money to be made in government bonds and securities. high yield savings.

According to the quarterly filing, Palantir ended the period with $1.62 billion in US Treasury securities, representing more than half of its cash, cash equivalents and short-term investments. That’s up from zero at the end of 2022, according to its annual report.

“Cash equivalents consist primarily of money market funds and U.S. Treasury securities with original maturities of three months or less, which are invested primarily with U.S. financial institutions,” Palantir’s filing said.

The disclosure comes a week after the Federal Reserve raised its benchmark rate another 0.25 percentage points, its 10th increase in just over a year, to a target range of 5% to 5.25% , the highest since August 2007.

Shares of Palantir soared 23% on Tuesday after the company reported earnings and revenue that beat analysts’ estimates. The stock rose another 4.1% on Wednesday to $9.94.

SHOW: Palantir CEO talks about the real value of AI

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top