After hitting multiple record highs, Palantir’s (NASDAQ: PLTR) share price has retreated, a move partly attributed to ‘buyer exhaustion.’
PLTR ended the last session down about 5%, trading at $72.46. Earlier in the day, the stock rally seemed unstoppable after opening at a record high of $80 that soared to $82.
Despite the short-term bearish sentiment, the American software giant is up a whopping 337% year-to-date and looks to reclaim the positive trend, rising 1.5% in pre-market trading on December 10.
Picks for you
PLTR stock facing buyer exhaustion
Based on PLTR’s latest stock price movements, charting platform TrendSpider observed in an X post on December 10 that the equity experienced a reversal, printing a bearish engulfing candle on heavy trading volume following a substantial gap-up.
This price action is indicative of potential buyer exhaustion and has historically suggested a possible shift in momentum from bullish to bearish sentiment.
The bearish pattern appeared after a strong rally triggered by Palantir’s recent earnings report, which initially boosted investor confidence and caused an earnings gap. However, the latest selloff suggests buyers may be running out of steam, with sellers gaining control.
Indeed, the potential buyer exhaustion might not surprise some, considering that PLTR’s relative strength index (RSI) has been operating in the overbought zone for some time. As things stand, attention remains on how Palantir interacts with key support levels around $66.
Palantir’s inability to establish a formidable momentum above the $80 mark comes when bullish fundamentals have backed the company. However, concerns about its valuation persist. Notably, some analysts believe the stock is pricing in future growth and could crash if the targets are not achieved.
Adding fuel to the cautionary outlook is sentiment from William Blair analyst Louie DiPalma, who reiterated an ‘underperform’ rating for Palantir. As reported by Finbold, the analyst noted that Palantir is likely to face a $700 million shortfall in its 2025 $4.5 billion revenue target.
DiPalma also pointed out that the new partnership with Booz Allen (NYSE: BAH) is unlikely to significantly impact growth, as the two firms have long collaborated.
Palantir’s bullish case
Palantir bulls, such as Wedbush Securities’ Dan Ives, labeled the company the ‘Messi of AI’ and maintained that Palantir is destined for further growth in 2025. He expects the Colorado-based entity to lead the software artificial intelligence space.
Looking ahead, Palantir continues to focus on partnerships with key institutions to drive future growth. For instance, on December 6, the technology firm announced a new consortium with defense contractor Anduril to strengthen U.S. leadership in artificial intelligence (AI).
At the same time, the company unveiled a contract expansion of $36.8 million with the U.S. Special Operations Command (USSOCOM). This development aligns with Palantir’s increased boost from government contracts, supported by its Federal Risk and Authorization Management Program (FedRAMP) certification.
Following its switch from the New York Stock Exchange to the technology-heavy Nasdaq, the stock may gain more exposure to capital. This move positions Palantir as a strong contender for inclusion in the prestigious Nasdaq-100, which could occur on November 13.
In summary, while Palantir’s fundamentals appear bullish, its technical setup remains an area of concern. A potential pullback could present an ideal buying opportunity for investors, considering the company’s likely future growth and its central role in the software AI space.
Featured image via Shutterstock
