Palantir Stock is Stalled
With PLTR stalled out in the low 20s I’m going to share some of my thoughts on the stock given its recent lackluster activity.
We’ll look at what has driven PLTR lower over the last few months and what catalysts coming up could bring it higher as well as ARK Invest’s activity with Palantir, and what Jim Cramer has to say about choosing whether or not to double down on this stock at current levels.
The Selloff
Now I won’t get to everything that has negatively impacted Palantir over the past few months, but I’m going to highlight 3 key reasons for why it has sold off nearly half its value from late January.
The free fall from the $45 ATH can be attributed to multitude of factors.
1) Macro Weakness
Technology stocks got crushed starting in February due to the reopening cyclical trade and rate fears that have continued to put pressure on growth stocks. You’ll see that PLTR and many others are re-testing relative lows. At this point it remains to be seen if that previous support level will be held.
2) Q4 Earnings
Palantir fell following the Q4 earnings report largely due to a wider than expected loss as a result of stock-based compensation employee payment. I’ve made on a video explaining why SBC is actually a net positive in my opinion and worth the supposed cost, but it nevertheless spooked Wall Street somehow.
3) Weak Hand Shakeout
More recently, CEO Alex Karp tempered expectations for the coming months and asked those looking for short-term gains to go elsewhere.
Of course, that doesn’t instill confidence in the near-term, but that’s just the point. It should get those focused on the long-term, high potential reward of Palantir fired up. Personally, it’s exactly what I wanted to hear from him.
Additionally, I believe many weak hands have gotten shaken out not only because of Karp’s comments, but perhaps they don’t know what the company is all about and haven’t done their research and choose to paper hand on stock for which they don’t understand is a long play.
Upcoming Catalysts
I don’t give investing advice. I will never tell anyone to buy or sell any stock since that’s no choice but your own and I’m terrible at timing the market — a realization I’m glad I’ve made.
But Palantir really has been hit hard and I still believe in the company. It’s hard to be more bullish when a stock goes down, but my PLTR conviction hasn’t wavered. I think this is a great buying opportunity.
I usually don’t like talking about short-term movement or price targets, but I think most of the pain is over at this point. It’s possible PLTR eventually drops under $20 if things go south again, but I do not think that is likely.
4 upcoming catalysts include:
- Demo Day Double Click on April 14th
- Q1 earnings
- Subsequent deals and contracts as we’ve been seeing every few weeks
- Hypothetical big future partnerships
So, I am not expecting any of these specifically to boost the stock, but those along with a re-rotation back into high-growth companies could rebound Palantir back into the $30–40 range over the next few months.
My target for the end of 2021 remains $50 which might be laughable at this point, but we’ll see how crazy it looks halfway through the year. I’ll keep you updated if my expectations change.
Time to Double Down?
Here’s Jim Crammer being asked if now is the time to double down on PTLR:
It goes without saying that I’m not very pleased with his response to this caller for a couple reasons, those being: the company is not a black box if you actually do your own research they literally hold investor day presentations such as Demo Day back in January that you can watch to get a better understanding of the company and Palantir has lost a lot of value off of its all-time high.
Granted, that $45 price was way ahead of itself as PLTR got thrown into the GameStop hype, but it’s not as if Palantir is still trading in the mid 30s. PLTR is at a discount. It’s just a matter of whether or not you believe the company is worth more than it is currently trading given a general idea of the growth trajectory and many tailwinds going forward for this business.
Ark Invest Buying
I’ll close by bringing up Ark Invest’s most recent buys of PLTR. Ark invest purchased 1.2 million more shares yesterday, March 24th in ARKK, the flagship fund. Their last buy was way back on March 5 with the stock under $21. So the stock has returned to their buy zone, and, naturally, they are buying big.
So that’ll do it for this roundup for Palantir. I’m still quite excited about the future prospects of this company and plan to keep dollar cost averaging going forward.
Maybe Palantir will reverse course in the next few weeks. Until next time…