Palantir: The sell-off is not over yet
Palantir Technologies (NYSE: PLTR) has been in a frantic state since its public listing through a direct listing in September. Consider that PLTR’s stock price has soared from around $10 to a high of $45. Source: Sundry Photography / Shutterstock.com But recently, things have become chaotic. Consider, PLTR stock is currently trading at $23.96, with a market value of $45 billion. Of course, the reason for the sell-off is mainly due to the recent weakness in the general market, especially for high-growth technology operators. Investors seem to be uneasy about raising interest rates quickly. InvestorPlace-stock market news, stock recommendations and trading tips However, overall market sentiment is not the only factor that affects PLTR stock. Remember, the latest earnings report also disturbs Wall Street. Now, on the surface, the performance is indeed reliable. Revenue increased by 40% to 322 million U.S. dollars, surpassing analysts’ expectations of 300.7 million U.S. dollars. As for non-GAAP calculations, earnings per share are 6 cents, while Wall Street’s forecast is 2 cents per share. 8 stocks to buy in March So, what went wrong with the report? Well, it seems that growth will slow down. The annual revenue is expected to increase by about 30%. Now indeed, management may adopt a conservative attitude. But then again, for some reason, people are more skeptical about the growth story. The business was established in 2003 and Palantir has built an impressive platform that can provide customers with sophisticated AI and machine learning models. Initially, the focus was on top-secret activities, such as finding terrorists or enemies on the battlefield. There was even a buzz saying that Palantir̵
7;s technical assistance found Osama bin Laden. But in the past decade, Palantir has been using its platform to enter the commercial market. However, this proved to be more difficult. After all, the market is fiercely competitive, with Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL, NASDAQ: GOOG), IBM (NYSE: IBM), C3.ai (NYSE: AI) and Accenture (NYSE: ACN), etc. Yes, the latest quarter did point out the challenges facing Palantir. Although government revenue soared by 85% to reach US$190 million, revenue from the commercial sector only increased by 4% to US$132 million. Even if the company announced major customers such as BP (NYSE: BP), Rio Tinto (NYSE: RIO) and PG&E (NYSE: PCG). In addition, relying heavily on government departments also has its own problems. William Blair (William Blair) analyst Kamil Mielczarek said: “Despite the exceptionally strong growth in recent quarters, the government sector is strongly supported by the U.S. Army contract won in 2019.” Another issue for the government sector. Yes, it may be under more pressure. Faced with reality, the budget deficit is at a high level. As a result, it will become more difficult to justify the new expenditure. PLTR stock’s bottom line lock-in PLTR stock has expired, which means that insiders can sell their holdings. And there are a lot of stocks. Chief Operating Officer Shyam Sankar sold 757,510 shares for between US$24.59 and US$29 (he netted more than US$21 million). Then three other executives sold 2.7 million shares. They include Stephen Cohen, co-founder and president; Matthew Long, general counsel; and Ryan Taylor, chief legal officer and business affairs officer. This activity is not necessarily extraordinary (after all, equity compensation is an important part of the Silicon Valley approach). But this is still a red flag. Whenever a group of executives sell their stock (especially after a big rise), it indicates that the stock is valued too high. For PLTR stocks that trade at 24 times the sales volume, this is really not surprising. This is definitely a short period of time because the growth rate may decline. Therefore, it may be better to temporarily reduce expectations for this investment. As of the date of publication, Tom Taulli did not have any positions (directly or indirectly) in any of the securities mentioned in this article. Tom Taulli (@ttaulli) is the author of various books on investment and technology, including “Artificial Intelligence Basics”, “High Yield IPO Strategies” and “All About Short Selling”. He is also the author of courses on topics such as Python language and COBOL. More on InvestorPlace Why everyone is investing in 5G. Everyone is wrong. The top stock picker reveals his next potential winner. It doesn’t matter whether you have $500 in savings or $5 million. Do it now. #1 Win Palantir from Biden’s profit as chairman: The article “The Selling Is Not Over” first appeared on InvestorPlace.