Palantir
Tula, Russia – November 11, 2020: Palantir Technolgies logo on iPhone display.

The Palantir stock price (PLTR) has gone nowhere in the past few days. The shares are trading at $20.50, where they have been in the past few weeks. They are also down by more than 55% from their highest level this year. The firm is now valued at more than $33 billion.

PLTR stock has struggled

There are several reasons why the Palantir stock price has struggled lately. First, its drop has coincided with the sharp decline of other growth stocks like Zoom Video, Okta, Tesla, and Teladoc, among others. This is simply because a rotation from growth to value has been happening as investors anticipate higher interest rates. 

Second, the Palantir stock price has struggled because of profit-taking. Furthermore, at its peak, the company’s share prices had climbed by more than 400% from its direct listing in 2020. 

Third, there are concerns about the company’s valuation. At its peak, PLTR was valued at more than $50 billion. This is a rich valuation for an unprofitable company that generated $1 billion in revenue in 2020. Its total loss more than doubled from more than $580 million to more than $1 billion.

Finally, Wall Street analysts have been relatively bearish about the stock. In recent notes, analysts at Wolfe Research, Royal Bank of Canada (RBC), and Jefferies lowered their price targets to $20, $20, and $28. Those at Credit Suisse, William Blair, and Citigroup are also bearish, as you can see below. 

Palantir
Palantir analysts forecasts

Some positives for Palantir

Still, there are some positives about the company. First, it has a strong market share in the data analytics industry that it serves. 

Most importantly, it has entered into long-term contracts with most of its customers, including the American government. These contracts are rarely canceled. 

In the most recent quarter, the company’s government revenue increased by 83% while the commercial sector grew by 72%. It added about 11 new commercial customers like MD Anderson, Lilium, and Syntropy. This is important since more companies will want to use Palantir’s products if they see their competitors using them.

In the recent Palantir earnings, the company reported a 49% year-on-year revenue growth to more than $341 million. It had an adjusted free cash flow of more than $151 million ad a margin of 44%.

Second, Palantir stock price is becoming cheaper. It has already dropped by more than 54% from its all-time high, making it relatively cheaper.

Palantir stock price analysis

The daily chart shows that the Palantir stock price has been on a freefall. It has managed to move below the 50% and 61.8% Fibonacci retracement levels. It is now hovering below the 61.8% retracement level. Also, it has moved below the 25-day and 50-day weighted moving averages. It has also formed a descending channel pattern and is now approaching the upper side of this channel.

Therefore, in the near term, the stock will likely retreat as the tech sell-off accelerates. However, in the long-term, the stock will likely bounce back and retest its all-time high.

Palantir Stock Price

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