Palantir
Palantir logo and sign is displayed on brick wall of big data analytics software company HQ campus in Silicon Valley – Palo Alto, California, USA – 2019

The Palantir stock price jumped on Tuesday after the company reported strong quarterly results. The PLTR stock is trading at $19.50, which is still 57% below its year-to-date high of $44.92. The company has a market cap of more than $36 billion. 

PLTR stock price chart

Palantir earnings

For starters, Palantir Technologies is a company that offers software for big data analytics to governments and big businesses. Some of its customers are companies like Morgan Stanley, Airbus, and Fiat Chrysler. Its three products are Gotham, Foundry, and Apollo. 

Palantir reported relatively strong quarterly earnings but warned that this growth could slow down. In total, revenue rose to $341 million, which was higher than the expected $332 million. The revenue was 49% higher than in the same quarter in 2020. $208 million of the revenue came from the government while the rest came from the commercial sector.

Meanwhile, the average revenue per customer rose to $8.1 million. It added 24 customers in the quarter, with 6 of them being worth more than $10 million. 

The Palantir stock price declined after the earnings but they then jumped by more than 4%. This happened after the company said that it would start accepting Bitcoin payments. Still, because of the nature of its service and customers, the volume of BTC transactions will be relatively small. The firm also hinted that it was considering investing in Bitcoin.

Is Palantir a buy?

“Should I buy PLTR stock?” Palantir is a controversial company in the investment industry. Some vocal investors like Cathie Wood have supported and bought the company. They cite its growth, market share, and the scale of its clients. Others believe that the company’s revenue and losses don’t validate the $36 billion valuation.

Wall Street analysts covering the stock are generally bullish. According to Marketbeat, the average estimate is for the stock to rise to $23.50, which is about 20% above the current level. Separatel, those at Credit Suisse have an underperform rating on the stock with a target of $20. Those at RBC Capital Markets expect it to jump to $27 while thpse at Goldman Sachs expect it to rise to $34.

In my opinion, I believe that long-term investors should buy the stock. For one, the company has a substantial moat in its industry. It also has stable cash flows since the government and large customers don’t have significant churn. It also enters into long-term contracts that are difficult to exit.

Sure, the Palantir stock price is overvalued. But all technology companies like Shopify, Facebook, and Amazon always appear overvalued. In fact, highly overvalued stocks tend to outperform value stocks. This is evidenced by the chart below that compares the Vanguard Value ETF and Vangyuard Growth ETF.

Vanguard Value ETF vs Vanguard Growth ETF

vanguard value vs Vanguard growth

Palantir stock price analysis

Palantir stock price
Palantir share price chart

The four-hour chart shows that the Palantir stock price has been under intense pressure since January when it rose to an all-time high of  $44. Since then, it has dropped by more than 50%. Along the way, it has fallen below the 23.6% Fibonacci retracement level. It remains below the 25-day and 50-day exponential moving averages (EMA). Further, the PLTR stock has moved back to the descending channel. It also formed a head and shoulders pattern.  

Therefore, in the near term, I suspect that the stock will continue falling as bears target the next support at $16. In the long-term, however, the stock will recover as investors rush to buy the dip.

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