- Palantir stock broke an important four-month support barrier on Monday.
- Wall Street was unenthusiastic about Q3 earnings that saw a slowing of government revenue growth.
- A high Wall Street valuation has not helped PLTR stock.
Palantir (PLTR) was up about 0.9% in the premarket but dropped 1.2% to $20.41 at the open in New York on Tuesday. This pushes PLTR price below that of July 19's $20.55 low and signals that the big data frontrunner is destined for further downside.
Palantir (PLTR) News: Downgrades, valuation keep PLTR in box
The deep sell-off that began on November 9 after Palantir announced fairly stellar Q3 earnings has failed to give up. Despite Palantir reporting 36% YoY revenue growth and 101% YoY US commercial revenue growth, Wall Street baulked at the slowing growth in government contracts. Government revenue grew at a rate of 66% in Q2 but fell to 34% in Q3.
Citigroup reiterated its $18 price target and sell rating. Morgan Stanley reaffirmed its Underweight rating. Wole Research reduced its price target from $25 to $20.
Even Palantir's management increasing its forecast for full-year adjusted free cash flow by about $100 million to "in excess of $400 million" has not improved prospects for the stock.
Not much else has happened to Palantir this month. There have been few if any press releases and the general market has begun to discount hot tech stocks in light of expected central bank tapering and future interest rate hikes. Once extremely heavy revenue growth cools a bit, the market tends to take a longer look at valuation metrics, which still remain heightened for Palantir. For instance, PLTR has a price-to-sales ratio of 29, whereas another hot stock of the pandemic era, Zoom (ZM), now is valued closer to 18x.
PLTR key statistics
Market Cap | $43 billion |
Price/Earnings | 562 |
Price/Sales | 29 |
Price/Book | 20 |
Enterprise Value | $43 billion |
Operating Margin | -39% |
Profit Margin |
-36% |
52-week high | $45 |
52-week low | $17.06 |
Short Interest | 3% |
Average Wall Street Rating and Price Target | Hold, $23.66 |
Palantir Stock Forecast: Expect PLTR to touch 52-week low by end of year
July 19's $20.55 has remained the low for PLTR until Monday. PLTR has only trended lightly under this level on Monday and Tuesday, but typically when a four-month barrier is broken it signals that there are more losses on the horizon. Further back, March 5, however, did provide a major bounce off of $20.18.
FXStreet finds it most likely that buyers should not get in until $17.06 – the low from May 11. It probably will not linger in that vicinity long. Just like it did in the first half of the year, we expect it to bounce off this region. There is still plenty of optimism in this stock from major investors, and everyone will notice the May 11 level.
Traders should note that the Relative Strength Index (RSI) is already down in oversold territory at 29, a region that has historically provided a quick boost to the stock. PLTR stock appears aimless this month though, and the likelihood of tech stocks continuing to rationalize their valuations ahead of the new year would seem to suggest that the pessimism will continue.
PLTR daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD advances to near 1.0750 as risk appetite regains balance
EUR/USD extends its winning streak for the third successful day, trading around 1.0730 during the Asian session on Friday. The risk-sensitive currencies like the Euro gain ground as risk appetite regains balance ahead of US Nonfarm Payrolls.
GBP/USD advances to 1.2550, all eyes on US NFP data
The GBP/USD pair trades on a stronger note around 1.2540 amid the softer US Dollar on Friday. The US Federal Reserve Chair Jerome Powell delivered a modest dovish message after the meeting on Wednesday, which weighs on the Greenback.
Gold lacks firm near-term direction, remains stuck in a range ahead of US NFP
Gold price struggles to gain any meaningful traction amid mixed fundamental cues. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support. Bets for a delayed Fed rate cut and a positive risk tone cap gains ahead of the US NFP.
Solana price pumps 7% as SOL-based POPCAT hits new ATH
Solana price is the biggest gainer among the crypto top 10, with nearly 10% in gains. The surge is ascribed to the growing popularity of projects launched atop the SOL blockchain, which have overtime posted remarkable success.
US NFP Forecast: Nonfarm Payrolls gains expected to cool in April
The NFP report is expected to show that the US economy added 243,000 jobs last month, sharply lower than the 303,000 job creation seen in March. The Unemployment Rate is set to stay unchanged at 3.8% in the same period.