How to buy N/A stock in Canada
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How to buy Palantir stock (PLTR) from Canada when it goes public
This data-driven software provider has filed a direct listing — here's how Canadian investors can get ready.
One of Silicon Valley’s oldest startups is opening the doors to public investors. However, revenue data is ambiguous, and it reportedly plans to lock 80% of its stock.
US-based Palantir is listed on the New York Stock Exchange (NYSE), a US exchange. So, if you want to buy into Palantir, you’ll need to use a brokerage that provides access to international stocks. You should note that not all Canadian trading platforms offer access to US-listed companies. Some platforms don’t offer access to international investments at all or only provide access to a limited range of investment opportunities.
But don’t worry — you still have options. We’ll walk through what you need to know about buying Palantir stocks from Canada.
Note: all dollar amounts on this page are in US dollars unless otherwise stated.
Can I buy Palantir shares from Canada?
You can’t buy Palantir shares on a Canadian stock exchange like the TSX or CSE, but you can from a Canadian-based brokerage that offers international access to US companies listed on US stock exchanges. Specifically, you’ll need a brokerage that provides access to the New York Stock Exchange (NYSE), the stock exchange on which Palantir shares are traded.
Two Canadian online trading platforms that provide access to stocks listed on the NYSE are Questrade and Wealthsimple. View our reviews of each to learn more.
The process of buying stocks in a US company while living in Canada is the same as buying stocks in a Canadian company. You buy and sell using your online trading account or through an investment broker who handles US stocks.
Tax implications of buying US stocks in Canada
Agreements between Canada and the US require Canadians holding US stock investments to pay the US Internal Revenue Service (IRS) a 15% withholding tax on any dividends earned on their US stocks. Interest earned from bonds or other interest-yielding US investments are similarly taxed at a rate of 10%.
An exception is made for stock investments held in trust exclusively designed to provide retirement income. Such trusts include RRIFs, LIRAs, LIFs, LRIFs and Prescribed RRIFs. RRSPs are also exempt from US withholding tax if you own US investments in the form of US stocks, bonds or ETFs.
Investment accounts that do not qualify for this exemption include RESPs, TFSAs and RDSPs.
All income from investments, including foreign investments, must be declared as part of your income on your Canadian tax return. Unless your US earnings are exempt from withholding tax, this means you’ll be double taxed on those earnings — first by the IRS, then by the CRA.
How to invest in US stocks from Canada
How to invest in Palantir
Palantir filed an S-1 registration form with the U.S. Securities and Exchange Commission (SEC) to publicly list its shares on the NYSE. According to that filing, the stock will go public under the ticker symbol PLTR, and the stock is expected to go public on September 23.
But Palantir isn’t offering a traditional IPO. Instead, the stock will be offered as a direct listing, which means it’s being sold by current Palantir investors rather than being created as fresh stock. And multiple reports suggest that Palantir is planning to lock up to 80% of its shares.
While we can’t speak on behalf of Palantir, companies typically make use of lock-up periods to keep company insiders from flooding the market with shares and destabilizing the stock price. No word on how long Palantir’s potential lock-up period may last.
To buy stock when it becomes available, you’ll need to have a brokerage account. Compare your options to find the best fit for you.
What we know
Palantir is trying to raise another $1 billion in fresh capital outside its public offering, according to CNBC. To date, Palantir has raised $2.6 billion and Forbes suggests the company could be worth as much as $30 billion. According to the S-1 filing, the company intends to list Class A, Class B and Class F stock. The Class A common shares will be available on the NYSE.
From 2018 to 2019, the company grew from $590 million to $740 million, but Forbes warns that Palantir is deeply loss-making, reporting net margins of -78% in 2019.
Like all investments, purchasing stock in Palantir is far from risk-free. The company’s financial reporting is ambiguous, and the potential lock-up period could tie up investor funds for months on end. Investors will need to perform their own due diligence and examine Palantir’s financial history in greater detail.
Palantir compared
Palantir is a software firm that specializes in big data analysis. It was founded in 2003 and is headquartered in Denver, Colorado. It collects and analyzes data for private enterprises and government agencies, including the United States Intelligence Community (USIC) and the Department of Defense. Its involvement in national security and government surveillance, coupled with its towering valuation despite never reporting a profit, has earned it quite the reputation.
Palantir is not an accredited business with the Better Business Bureau (BBB) but receives an A rating based on the BBB’s criteria that factors in length of time in business, among other considerations.
Results of similar public offerings
Here’s how some similar software firms performed after going public:
Datadog (DDOG) is a SaaS-based data analytics platform that offers data monitoring services for cloud-based applications. It launched on the NASDAQ in September 2019 at $36.15. It saw moderate growth in the six months following its release but began to dramatically climb in April 2020. It peaked at $96.41 in July 2020 and now trades at $83.77.
Splunk (SPLK) is a software firm that monitors machine-generated big data from its headquarters in San Francisco. It went public on the NASDAQ in April 2012 trading at $36.20. Outside a brief spike to $92.75 in 2014, the stock didn’t begin to truly gain traction until early 2018. It saw an all-time high of $211.32 in July 2020 and now trades at $203.62.
Verint (VRNT) specializes in security, surveillance and business intelligence software. It went public on the NASDAQ in 2002 trading at $12.30. With several notable ups and downs over the years, the stock peaked at $64.71 in May 2015. It now trades at $45.80.
Compare online trading platforms in Canada
To buy stock, you’ll need to open a brokerage account. Compare your options using the table below to find the best fit. Take a look at our guide to opening a stock trading account to learn more.
Note: The dollar amounts in the tables below are in Canadian dollars.
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