TLDR
- Palantir stock has fallen over 30% from its 52-week high of $125.41 to under $84
- Company insiders are selling stock rapidly despite strong performance
- Palantir reported 64% growth in U.S. commercial revenue and 45% growth in U.S. government revenue last quarter
- Stock trades at a forward P/E ratio of 160, significantly higher than other AI stocks like Nvidia (26)
- Despite recent drop, Palantir shares are still up more than 255% over the past 12 months
Palantir Technologies has seen its stock price tumble more than 30% from recent highs, prompting questions about whether this presents a buying opportunity or signals deeper concerns.
The data analytics company closed Monday at under $84 per share. This represents a 33% decline from its 52-week high of $125.41.
The drop comes amid a broader market decline. Palantir stock fell more than 25% in the past month alone.
Despite this recent setback, Palantir shares have delivered impressive gains over the longer term. The stock is up more than 255% over the past 12 months.
Company insiders, however, appear to be taking advantage of the stock’s strong performance to sell shares. Management has been selling Palantir stock rapidly, which some analysts view as a warning sign.
Fundamentals remain strong
Palantir’s business fundamentals continue to show strong growth. The company reported impressive results in the final quarter of 2024.
U.S. commercial revenue grew by 64% year-over-year. This suggests strong adoption of Palantir’s services in the private sector.
U.S. government revenue increased by 45% during the same period. Palantir has long maintained strong relationships with government clients for counterterrorism and other security applications.
The company’s AI-powered platform has accelerated its growth rate in recent quarters. Palantir helps organizations make data-driven decisions across various industries.
Investor concerns
The main concern for potential investors is Palantir’s extremely high valuation. Even after the recent price drop, the stock trades at a forward price-to-earnings ratio of approximately 160.
This valuation far exceeds that of other companies in the AI space. For comparison, Nvidia, a leading AI chipmaker, trades at just 26 times forward earnings.
The premium valuation means investors are paying for years of future growth expectations. This leaves little margin of safety if the company faces any setbacks.
Analysts warn that bad news related to AI spending could trigger further price corrections. The high valuation makes the stock particularly vulnerable to shifts in market sentiment.
While Palantir’s growth story remains compelling, the current price may still be too high. Investors might find better opportunities in AI stocks trading at more reasonable valuations.
The stock’s recent decline has made shares cheaper than they were a few weeks ago. However, some market observers believe further price adjustments could be on the horizon.
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