Why Is Palantir Buying Penny Stock in a Flying Car Startup?

The company now owns millions of shares in this $4.50 stock

• Palantir has slowly and quietly acquired more than 4.4 million shares of SRFM over the last two years.
• Stock in the flying car company trades at around $4.50 per share, up almost 150% in the last eight trading days.
• Palantir and analysts alike believe SRFM could go much higher.

If you’re an investor, you’ve heard of Palantir (PLTR). It’s the darling of the market, growing 450% in 2024 and following it up with gains of almost 100% so far in 2025, even with the Liberation Day sell-off setting it back a month. 

But recently, Palantir disclosed it has a darling of its own — an electric aviation startup based in California called Surf Air Mobility (SRFM). (Aerotyne International, anyone?). It bought 4.4 million shares, enough for an equity stake of nearly 20%. 

Let’s unpack this position and see if SRFM really has enough runway to take off, or if Palantir is just doing its best impression of Jordan Belfort. 

A penny stock with big ambitions

Surf Air Mobility develops electric and hybrid-electric propulsion systems for regional aircraft, aiming to stay fully electric for flights of 500 miles or less and using fuel for flights beyond that distance. It also operates its own regional airline under the Surf Air brand. 

The company is vertically integrated, combining technology development with flight operations. An advantage they have over their electric aviation contemporaries is the ability to retrofit existing aircraft, primarily Cessna Caravans, for lower-cost, lower-emission travel. 

It blends clean-energy innovation with regional mobility and aviation disruption. Its many competitors include other electric vertical take-off and landing (eVTOL) aircraft startups like Joby Aviation (JOBY) and Archer Aviation (ACHR) , as well as traditional commuter airlines and ground transportation options. 

They are about to implement a proprietary technology suite using AI to enhance fleet management, logistics and predictive management. It’s called SurfOS — with subsidiaries BrokerOS, OperatorOS and OwnerOS. This suite was developed in partnership with — you guessed it — Palantir. Commercial deployment is planned for early 2026. 

Why Palantir wants a stake in this micro-cap

Palantir first worked with Surf Air in 2023, initially just to develop the SurfOS suite. In February of 2024, the attitude of the partnership shifted, and Palantir took a stake in the company via equity-for-services. The initial stake was just over 2 million shares, good for 10% equity in the company. 

In the 15 months since, Palantir has gradually added just over 2 million more shares, through a mix of buying with its own funds and being given further equity for its software contributions. The Schedule 13G/A filing from June 23 of this year shows that Palantir now owns just over 4.4 million shares of the company, for a 19.9% stake. 

Palantir has firmly asserted that this is a passive position and that it has no intention of controlling Surf Air. This mirror’s the playbook Palantir has used in previous partnerships with aerospace and defense clients; provide their foundry (or, in this case, foundry-enabled SurfOS) in return for equity, aligning the success of its partners with its own upside. 

This strategy means that as long as Palantir does good work and helps partners grow, it will grow alongside them. With Palantir’s tools deployed to optimize Surf Air’s flight operations, maintenance, and demand and scheduling algorithms, both firms are positioned to leverage this data-driven efficiency into growth.

Data, disruption and the long game

Surf Air has already exploded since PLTR disclosed its equity in the stock, moving from $1.80 per share at the end of June to almost $4.50 per share today, a gain of nearly 150% in just eight trading days. SRFM is valued at around $150 million, rapidly moving from penny stock to micro-cap status. 

For SRFM, Q1 of FY2025 saw revenue of $23.5 million, albeit with a net loss of $18.5 million and an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of -$14.4 million. It did a good job of cutting costs throughout FY2024, but cash burn still remains high. 

Analyst coverage of Surf Air is sparse at best but of the few firms covering this stock, the average 12-month price target is $6.33. This average likely has a bullish bias because most firms covering this company are doing so because they’re bullish. All firms with published price targets note they are conditional on the company’s execution and regulatory progress. 

SRFM still has numerous hurdles to clear before it could make this kind of leap. Most notably, the Federal Aviation Administration (FAA) has yet to certify hybrid-electric powertrains and retrofits, which are a major part of the company’s core business. Additionally, there are capital needs for scaling infrastructure and its fleet of aircraft, as well as execution risks in a low-revenue, high-capex context. 

Palantir’s thesis boils down to three core ideas. The first is that a data-powered efficiency advantage should help SRFM overcome thin margins. It also believes SurfOS could prove to be transformative and that its equity stake could appreciate dramatically. Lastly, it thinks this strategic alignment grants optionality in the emerging regional electric air-mobility sector, without needing full control and the risk that comes with it. 

Penny with promise or pink sheet peon?

Like any penny stock, Surf Air comes with a number of risks and hurdles to overcome before it can establish itself as a legitimate small to mid-cap player. However, unlike many penny stocks, the path for SRFM is clear and the next few years are mapped out. 

Unlike almost all penny stocks, SRFM has the backing of a legitimate market giant in PLTR — and that giant has decisively tethered some of its own success directly to SRFM’s. This is a huge leg up over the traditional penny or micro-cap because Palantir is both partnered with and invested in Surf Air, not just one or the other. 

No stock this cheap comes without an abundance of risk, but if you’re the type to take a shot on pennies or micro-caps, this one certainly seems like the cream of the crop right now. Perhaps it will take off and fly to 30,000 feet; perhaps it will crash into the barriers at the end of the runway.

Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
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