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Have Palantir short-sellers finally won?

Have Palantir short-sellers finally won?
Elmaz Sabovic

In the ongoing struggle against short-sellers, even Palantir (NYSE: PLTR) CEO has stepped in, but it appears their influence is beginning to affect PLTR stock, as analysts express a lack of confidence in it. 

Despite a year of significant gains surpassing 180%, analysts now project a potential 20% downside risk for PLTR stock in the future.

PLTR stock 1-year price chart. Source: Google Finance
PLTR stock 1-year price chart. Source: Google Finance

Analysts downgrade PLTR stock amid doubts about financials

On March 28, analysts at Monness, Crespi, and Hardt downgraded Palantir stock from Neutral to Sell due to what they described as an ‘egregiously rich valuation’ following the company’s nearly 180% rally driven by AI advancements over the past year.

The brokerage firm set a 12-month target price of $20 for PLTR, which represents a decrease of over 18% from the stock’s last closing price.

While acknowledging Palantir’s potential to benefit from the long-term AI trend and capitalize on volatile geopolitics, analysts also highlighted challenges such as inconsistent government contract revenues, uneven execution, and a high valuation. They expressed concern about the economic downturn ahead.

Analysts' price target for PLTR stock. Source: TipRanks
Analysts’ price target for PLTR stock. Source: TipRanks

What does Palantir CEO have against short-sellers?

Recently, Alex Karp, CEO of Palantir Technologies, claimed that PLTR stock declines were due to short-sellers betting against its progress.

However, examining the current data, we observe a positive change favoring PLTR stock of -14.79%, with only 3.74% of shares shorted. This contradicts Karp’s statement, especially considering his recent sales of PLTR stock.

PLTR stock short-interest data. Source: MarketWatch
PLTR stock short-interest data. Source: MarketWatch

Why is the $22 level a must-hold for PLTR stock?

The significance of the current price of PLTR stock is evident on its price chart, where a notably bearish head and shoulders pattern has emerged. This pattern suggests a potential downside in the price in the future.

Moreover, the pattern indicates that the new downward trend is likely to persist until the right shoulder is broken—meaning prices surpass the peak on the right side.

PLTR stock head and shoulders pattern. Source: TrendSpider
PLTR stock head and shoulders pattern. Source: TrendSpider

Only time will reveal whether PLTR stock can evade the predicted price decline indicated by technical indicators, or if it will succumb to them.

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