Palantir co-founder and CEO Alex Karp believes this era of “deadly” macroeconomic uncertainties will crush many firms with shaky fundamentals.
“Bad times are incredibly good for Palantir … bad times really uncover the durable firms, and tech goes through bad times … rates of interest are the rationale,” Karp said Thursday on CNBC’s “Squawk Box.” “Will this deadly tidal wave wipe out some firms? Yes it can.”
The Federal Reserve on Wednesday raised benchmark rates of interest by one other three-quarters of a percentage point to a spread of three%-3.25%, the very best since early 2008. The Bank of England, the Swiss National Bank, and the central banks of Norway, the Philippines, South Africa, Taiwan, Vietnam and Indonesia followed suit, climbing rates to manage inflation that has spiraled during the last yr.
Palantir is a developer of information evaluation software that went public via a direct listing in September 2020 after nearly twenty years as a personal company. The stock is down nearly 60% this yr.
Karp said only those quality firms producing durable goods would survive the hard times.
“You will notice that the durable firms that come out of this in three, 4 years … are largely going to be from America, largely from the West Coast and they’re going to be specializing in producing things that truly matter,” Karp said.
The chance of a recession within the U.S. crept higher because the Fed vowed to beat inflation with aggressive rate hikes. The central bank has dialed down its economic projections, predicting higher unemployment and far slower GDP growth.
Karp believes that the situation is much more dire overseas.
“Individuals are scared s—less about energy outside of America,” Karp said. “They’re so scared in regards to the macro-political conditions that nobody desires to discuss them. Their enterprises are built for a static and unified world of peace. The balance sheets obviously are sometimes not prepared for what is going on to occur, which I feel goes to be pretty bad in the subsequent couple of years politically and economically.”