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Palantir CEO slams metaverse as ‘idiosyncratic pursuit’ of the elite

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Alex Karp, the CEO of Denver-based Palantir Technologies (NYSE: PLTR), said Monday he believed the global economic downturn would serve to “winnow the field of participants in the technology sector.”

Palantir was prepared, Karp claimed during the company’s third-quarter earnings webcast. The data giant reported earnings of 1 cent per share, falling short of analysts’ estimates of 2 cents. However, Palantir’s revenue beat expectations and increased 22% year over year, and the company reported $2.4 billion cash with no debt.

“Our preparation for the current moment is anything but accidental. We anticipated the present volatility and will continue to grow, not in spite, but because of it,” Karp wrote in a letter to shareholders.

In the letter and during the earnings webcast, Karp criticized Meta Platforms Inc. (Nasdaq: META) as being Palantir’s foil. He described Meta CEO Mark Zuckerberg‘s investment in the metaverse, a virtual-reality world, as an “idiosyncratic pursuit of the technocratic elite.” Karp’s comments came around the same time Monday that the Wall Street Journal reported Meta was preparing for large-scale layoffs this week that would affect “many thousands of employees.”

Meta, the parent company of Facebook, Instagram and WhatsApp, reported a 4% decline in revenue in Q3, driven largely by its virtual reality division, Reality Labs. The division sunk about $3.7 billion into the metaverse project last quarter, according to an October earnings release. Zuckerberg said on an earnings call that the project was a “massive undertaking” that was of historic importance and would lay the foundation for the long-term outlook of the business.

The company estimated that its operating losses at Reality Labs would continue to grow next year. Ahead of the earnings call, one of Meta’s shareholders, Altimeter Capital Management, wrote in an open letter to Zuckerberg that the investments in the metaverse were “super-sized and terrifying.” 

Karp, who often criticizes Silicon Valley, slammed the metaverse project as a luxury.

“We are living in this world, not in some meta-fake world that you may enjoy until you wake up and you are poorer, your brain works less and you hate your neighbor,” Karp said during the earnings webcast. “Why do you think we have $2.4 billion in the bank and no debt? We weren’t living in the meta-sphere.”

Palantir, which is known for its work with the U.S. military and other federal agencies, closed $1.3 billion worth of contracts in the third quarter, about $1 billion of which were with the U.S. government. The increase was driven by the company’s work with the military, which Palantir supports with artificial intelligence and machine-learning capabilities, Karp said in the letter to shareholders. The data giant’s work with the federal government is often secretive in nature.

“We are enormously proud of our work defending the West, especially the U.S. military and its allies,” Karp said during the Monday webcast. “I wish I could tell you more about what we’re doing and how much it’s transforming the world into a better place, how much it scares our adversaries and how much we were underestimated by our adversaries because of the informational technology and products we’ve built.”

Earlier this year, Palantir said it’s leaning into the commercial business sector after building its legacy on government contracts. The company reported that its commercial revenue grew 53% year over year during the third quarter, and its commercial customer count increased 124% year over year, from 59 customers in the third quarter of 2021 to 132 customers in the same period of 2022.

While Palantir expects individual regions within the U.S., including the Midwest, New England and Texas, to develop into billion-dollar markets, the company said its enterprise software has been slow to catch on in Europe. Naming Germany, in particular, Karp said that European countries have “fallen behind” the U.S. in their willingness and ability to implement enterprise software systems “that challenge existing habits and modes of operation.”

“We are going to see negative impacts because of… the sluggishness to adopt new technologies in Europe,” Karp said. “This is impacting our business.”

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