Palantir Gets A New Deal from Lithuania

Breaking down why this deal matters + updated short float & a downgrade

Welcome back to DailyPalantir! On this newsletter, we’re going to dive deeper into the new deal Palantir got from the Lithuanian government earlier this week and why it matters for the company long term — let’s get into it!

Earlier this week, Palantir got a new deal from a country that they have kept a relationship with for a long time…Lithuania.

The Deal

Palantir has just won a $37M contract with the government of Lithuania.

This photo is from the Central Public Procurement Portal (CVPP) which contains all relevant information about Lithuania's ongoing public procurements.

This contract was signed in March with the State Data Agency, specifically the Department of Statistics under the Government of the Republic of Lithuania on March 19th, 2024. Lithuania and Palantir have had an ongoing relationship for a while. In April 2023, Palantir announced plans to establish a regional technology hub in Lithuania.

Now, both Palantir and Lithuania know each other very well.

From Karp in 2023: "The critical role Lithuania plays on the world stage will only continue to increase with the current arc of our geopolitics. We are more than grateful to the President of Lithuania for our new partnership with the Ministry of Defense to establish a technical center in Vilnius, which will strengthen not only the nation and its Baltic partners, but also the democratic values which they seek to uphold."

From Lithuania's president in 2023: “Developing new high technology oriented foreign investment opportunities as well as creating partnerships to co-create new technological products important for regional security is a win-win policy. Lithuania’s talented labor force and attractive business environment is our treasure we must further nurture.”

From a PR they both did last year when Palantir officially announced plans to establish a regional hub of big data competencies in Vilnius:

“Strengthening Lithuanian expertise in data-driven defense capabilities and becoming a center of excellence within the Baltic States and NATO members will strengthen defense potential and support the development of Lithuania‘s defense industry and respective ecosystem,” says Arvydas Anušauskas, Minister of Defense.

Palantir Technologies combines practical expertise in distributed systems infrastructure, big data processing, user experience design, and data science. The company’s solutions have already been used in the fight against COVID, military support for Ukraine and the resettlement of Ukrainian refugees in Lithuania.

“We are excited to see Lithuania continuing to pursue the path of technology and high-value-added solutions that can strengthen our positions as a regional hub for contemporary competencies,” says Elijus Čivilis, General Manager of Invest Lithuania. “Big data processing is not a far-future technique – it already holds great importance on various sectors now. Lithuania constantly strives to be a better place for creating and trying out new technologies or solutions, so I am sure it will also be a great place for Palantir Technologies to grow and innovate.”

To me, this is really good news. Palantir's international government revenue is one of the segments of the business that hasn't done as well as commercial, so it's exciting to see the company tap into their partnerships with other countries and get bigger deals done on the government side. If government revenue globally can reaccelerate...along with commercial doing well...this can be very big.

It’s Only $37M…

Some people are saying $37M really doesn’t matter for Palantir, I think those people are missing 3 key points:

1.) I agree that $37M isn’t a huge amount of money for $PLTR — this news would be just as important if it were $3M. Why? 

Because it’s not the DoD. It’s a whole new country! Establishing relationships with countries and actually getting contracts in place is what is necessary to further nurture those relationships to eventually get larger deals. $37M today, $337M in a few years after Palantir shows their value — which is what they are the best at.

2.) It’s an international government deal — we are seeing gov revenue overall not grow as much as commercial, so we NEED countries outside the USA to start buying Palantir’s software. 

The US alone can’t grow gov revenues because it’s cyclical and has many moving parts, having other countries — like the UK — get associated with Palantir in year 1 and then give them $480M by year 3 (NHS deal) is what we need to grow, so Lithuania is another country that can help that international gov rev reaccelerate. 

3.) IT’S LITHUANIA! This is a country on the Baltic states…they are scared just like other countries in that region on if Putin were to decide to invade them after Ukraine…

One of the reasons they are probably giving Palantir smaller contracts is because they likely are thinking about procuring Gotham and getting their country ready in case anything were to happen. Gotham would not be $37M. It would be a multi-year contract comprising of the most sophisticated defense software. If Palantir gets Lithuania, they may be able to get other baltic states like Poland. 

Countries across the world are increasing defense budgets. Many of those countries part of NATO. 

Palantir has a chance to capture that ENTIRE market over the next decade, and deals like the one we are seeing today get them closer to doing so.

Updated Short Float

The shorts continue to walk away from Palantir. To see the short float now go down another 15% over the past 2 weeks is showing me that people are actually afraid to short Palantir because they just don’t know if a big deal can come out and send the stock going higher.

AI matters, and Palantir is a real AI Play. It’s also hilarious to me because many people didn’t like Alex Karp publicly calling out the shorts on the recent CNBC interview where he mentioned that they were high off cocaine, but it kind of feels like the shorts felt Karp’s comments were so crazy they might just want to not touch this stock because they have no clue how wild Alex Karp and Palantir are going to get.

I love it, hahaha.

Palantir Downgrade

So, Palantir fell 6% on Friday to below $23 because of a downgrade with a PT of $20. I have never heard of the firm doing the downgrade, but I guess their opinion mattered enough for the stock to fall.

At this point, I have seen enough from Palantir to believe they are executing at a high level. When firms decide to downgrade the stock, you have to remember that many other firms have upgraded the stock, and those firms also may have access to better data than the ones downgrading. I trust Mariana from Bank of America and Dan Ives from Wedbush a bit more than the other names.

If Palantir can consolidate into this $22-$25 range, then any dips to me don’t matter that much. I think it’s actually very healthy for us to be in this range before attempting to make the next leg up into the $30s after, hopefully, a strong Q1.

At this point, Palantir’s stock action should be boring — it’s already up 40% this year, so it’s hard to expect more gains this quickly. The company itself has news that’s coming out every. single. day. It’s hard to even keep up with all the news. So, when analysts downgrade the stock because it is “overvalued,” I look to two things:

1.) is the company executing (given the news we are seeing every day, the answer is yes)

2.) is the stock reflecting that execution and being given a premium as a result of that (yes, Palantir trades at a premium but it is because investors are happy to pay more for the myriad of things they are doing, including winning huge gov contracts like TITAN and putting on hundreds of bootcamps a month)

As a result, the downgrades don’t mean much anymore (unless I think they are warranted because the company isn’t executing — I currently don’t feel that way) but I did buy more as we dipped on Friday and will buy more if we continue to dip.

Thank you for reading — I’ll see you tomorrow in your inbox and as always, you can support the newsletter by signing up for a yearly subscription to hobbits.ai, a custom LLM built and trained on Palantir content