Palantir Shares Plunge Amid Valuation Concerns

DENVER, Colorado — Palantir Technologies Inc. saw its shares fall below the 100-day moving average on Nov. 21 and further decline on Monday, as concerns about high valuations and broader economic uncertainty led to a selloff.

This breach of the moving average, a key technical indicator, raises fears of continued bearish momentum for the company. Historically, this average has acted as support for trending stocks.

Despite being one of the most expensive stocks in the S&P 500, Palantir’s price-to-sales ratio stands at nearly 130x, compared to 32x for the next highest stock in the index. Analysts warn that Palantir could see over a 65% decline and still retain the highest sales multiple.

The Denver-based firm has a market capitalization of nearly $400 billion, resting on revenues of under $4 billion, suggesting a significant disconnect that rarely ends well.

In the past six months, company insiders have sold shares, indicating a lack of confidence in the stock’s future performance. Although Palantir reported growth in its latest financial quarter in both government and commercial sectors, rapid growth metrics are declining while prices remain high, creating a fragile state for the stock.

Renowned investors, including billionaire Stanley Druckenmiller and “Big Short” investor Michael Burry, have raised concerns about Palantir’s valuation.

Historical performance over the last four Decembers shows that the AI-enabled data analytics firm has averaged a loss of over 8%. Nevertheless, Wall Street analysts suggest the stock’s recent decline may have been excessive, with a consensus rating of “Hold” and a price target of $192 indicating potential upside of nearly 20% from its current level.

On the date of publication, the author did not hold positions in any of the securities mentioned. All information is for informational purposes only.