Palantir (NASDAQ: PLTR) finds itself at a critical juncture as Jefferies analyst Brent Thill reiterated his ‘Underperform’ rating, maintaining a $28 price target for the stock on January 13.
Despite its meteoric rise of +341% in 2024, Thill’s caution reflects growing concerns over Palantir’s valuation, volatility, and insider selling trends. The analyst’s bearish stance on Palantir dates back to his November 7 downgrade, when he revised his rating from ‘Hold’ to ‘Underperform’ while maintaining the same $28 price target.
In his analysis, Thill emphasizes the risk of “multiple compression”—a scenario in which Palantir’s premium valuation could erode as broader market sentiment shifts, particularly amid increased competition in AI and data analytics.
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Palantir stock analysis
PLTR stock closed at $64.98 on Monday, marking a 3.39% decline for the day and a staggering 17.73% drop over the past five trading sessions.
In the last month, Palantir has fluctuated within a wide range of $63.40 to $84.80 and is currently trading near the lower end of this band.
In this case caution is advised, the recent downward momentum suggests it may be prudent to avoid initiating new long positions until the stock finds firmer ground and demonstrates signs of consolidation.
PLTR price action and technical indicators
Palantir remains near the upper portion of its 52-week range, keeping it in line with broader market performance, as the S&P 500 also trades at elevated levels. Despite this, the stock’s volatility has made it difficult for investors to identify attractive entry and exit points. Key technical levels reveal a support zone at $54.44, marked by a trendline on the daily chart.
On the upside, significant resistance is evident in the $64.99 to $65.53 range, formed by the confluence of multiple trendlines and key moving averages across various time frames. Breaching this zone would be crucial for Palantir to regain upward momentum, but failure to do so could signal further weakness.
Palantir valuation concerns and insider activity
A major point of contention for Thill is Palantir’s valuation. Despite its recent pullback, the company is still trading at 46x enterprise value-to-next-12-months (EV/NTM) revenue, more than 2x higher than the next most expensive software stock in its peer group. This elevated multiple suggests that Palantir may be priced for perfection, making it vulnerable to any signs of slowing growth or market volatility.
Adding to these concerns is the substantial insider selling over recent months. CEO Alex Karp alone has offloaded over $2 billion in stock through 10b5-1 plans, while other executives have sold more than $600 million combined in the past five months. Such significant sales can often be interpreted as a lack of confidence in the stock’s near-term prospects and may weigh on investor sentiment.
“>$2bn in stock and other execs selling >$600mm over the last 5 months. Active institutional ownership increased 5pts to 32% post the Nasdaq 100 inclusion, which may reduce the retail premium going forward. We believe there is more downside ahead on multiple compression.”
However, Thill cautions that this shift in ownership could temper the retail-driven premium that has historically bolstered the stock’s valuation.
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