Palantir Technologies Inc. is expected to fetch a lofty valuation in its transition to a public company despite an unusually aggressive governance structure, in the latest sign of investors’ voracious appetite for new shares.
The data-mining-software specialist is eschewing the traditional IPO route and going public through a direct listing, in which a company floats its existing shares on a public exchange and lets the market determine the price. Ahead of a debut planned for September 30, Palantir’s bankers have told investors the shares could start trading around $10 apiece, according to people familiar with the matter. That equates to a market valuation of nearly $22 billion on a fully diluted basis.
In the private markets over the past year, Palantir’s stock has trended higher. The volume-weighted average price in August was $7.31 and in September, $9.17.
Those average prices are likely to help determine Palantir’s reference price, the guidepost to where the stock could open in a direct listing. The stock exchange publishes the price after looking at recent private-market transactions and consulting with the company’s financial advisers.
There is no guarantee Palantir shares will start trading at the expected level, and even if they do, that they’ll stay that high for long.