- The recent downward momentum in Palantir’s stock price may be just the beginning. There are some important reasons for this, which I explain in this article. Read on.
- The bar for future business growth, which was priced in right after PLTR’s Q1 results, started to disappoint.
- I believe PLTR stock growth is going to be heavily weighed down for at least the next few months as its multiple expansion cools off.
- Technical picture: the market structure has changed from bullish to bearish over the past few days.
- I’m downgrading PLTR stock to “Sell” again and expect a sobering correction in the coming weeks.
The article discusses the author’s decision to downgrade Palantir Technologies Inc. (PLTR) to a “Sell” rating and provides reasons for this change in stance. Here are the key points from the article:
- Background: The author has previously maintained a bearish outlook on Palantir and has periodically updated their assessment based on market conditions and company performance.
- Market Environment: The article emphasizes the importance of understanding the market environment for risky assets and mentions that persistently high-interest rates can negatively impact the price-to-earnings (P/E) ratios of high-growth companies like Palantir.
- Earnings Estimates: The author suggests that earnings per share (EPS) and revenue estimates for Palantir may need to be revised down after the company’s Q2 results disappointed the market.
- Revenue Growth: While analysts may expect gradual low double-digit revenue growth for Palantir, the author expresses concerns about the company’s ability to maintain such growth and suggests that Palantir’s offering is relatively expensive.
- Profitability: The article notes that Palantir’s profitability is rated as “B+” but highlights that the company has a heavy reliance on stock-based compensation adjustments for positive cash flow from operations.
- Technical Analysis: The author briefly mentions a bearish change in the technical chart pattern for Palantir.
- CEO Selling: The CEO of Palantir, Alex Karp, has been selling shares, and the diluted number of shares has been increasing quarterly.
- Market Sentiment: The article suggests that there is a bullish consensus in the market, which the author views with skepticism.
- Bottom Line: The author downgrades Palantir to a “Sell” rating and expects a correction in the stock price in the coming weeks.
It’s important to note that the author’s views are based on their analysis and opinion. Investors should conduct their own research and consider their investment objectives and risk tolerance before making investment decisions. Additionally, the stock market can be influenced by a wide range of factors, and it’s important to consider multiple perspectives when evaluating an investment.
