Insider stock sales, especially around price peaks, often drive speculation among investors, as such transactions can lead to volatility due to lingering concerns about a company’s future outlook.
In this context, American software giant Palantir (NYSE: PLTR) is the latest entity to witness significant insider selling activity, implicating the company’s CEO, Alexander Karp.
The executive has offloaded PLTR shares totaling approximately $254 million in transactions spanning three days, according to filings with the Securities and Exchange Commission (SEC).
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The transaction details indicate that on October 25, Karp sold 1,706,841 shares at an average price of $45.0062, totaling $76.8 million.
Three days later, he sold an additional 3,337,048 shares at an average price of $45.0168, generating about $150.2 million. The final transaction in this series occurred on October 29, when Karp liquidated 612,404 shares at an average price of $45.0177, netting almost $27.6 million.
Implication of Karp’s stock sales
These sales were executed as part of a preexisting Rule 10b5-1 trading plan, which allows insiders to sell a predetermined number of shares at set times.
Additionally, it’s worth noting that the transaction aimed to exercise and convert vested Class B Common Stock options into Class A Common Stock, which were then sold in the open market.
As PLTR stock has soared recently, several other insiders have been offloading shares. For instance, as reported by Finbold, Ryan Taylor, the Chief Revenue and Legal Officer; Heather Planishek, the Chief Accounting Officer; and directors Lauren Friedman Stat and Alexander Moore have sold between 6,000 and 155,000 shares since September 9.
These transactions come as Palantir stock has enjoyed bullish momentum, primarily supported by the firm’s venture into artificial intelligence (AI), which led to a record high of almost $45.
Aside from the bullish sentiment generated by its AI venture, Palantir has secured several notable contracts and partnerships, including a recent $100 million agreement to supply the U.S. armed forces with advanced AI software.
Amid these gains, concerns persist regarding the sustainability of Palantir’s momentum, particularly around its valuation. Some analysts argue that PLTR’s stock price may not reflect the company’s actual valuation and warn of potential downside risks.
Palatir’s limited addressable market is another red flag facing the technology firm. For example, Palantir’s U.S. commercial sector’s average revenue per customer is around $2.15 million annually, restricting its client base to the largest corporations.
While Palantir’s AI Platform (AIP) product is expected to drive revenue, there are warnings it may face headwinds due to competition from established players such as Google Cloud.
What next for PLTR stock price
At the close of the last trading session, PLTR was valued at $44.93, reflecting modest gains of less than 0.1% over the 24 hours. Year-to-date, the stock has rallied 170%.
Looking ahead, stock market analyst The Long Investor noted in an X post on October 28 that, based on technical analysis, PLTR can reach as high as $84 per share.
However, the analyst warned that the current revenue growth does not support such a high valuation. For PLTR to continue its climb, it will need significant time for revenue growth to align with its ambitious price targets, suggesting that a pullback in the near term may be likely.
This view aligns with a recent Finbold report, which indicated that another analyst sees signs of exhaustion in the stock despite its recent all-time highs.
Finally, the upcoming earnings report, slated for November 4, is expected to provide more insight into Palantir’s financial outlook. Analysts like those at Bank of America (NYSE: BAC) forecast that the stock may hit $50.
