While the stock price of Palantir (NYSE: PLTR) has been on a bullish run in recent weeks, technical indicators are warning that investors should anticipate a possible sell-off in the coming days.
The PLTR share price ended the latest trading session valued at $42, gaining 0.17% for the day. On the weekly chart, PLTR is showing bearishness, down over 3%.
PLTR has rallied over 90% in the past 134 days, but this strong performance seems to be nearing an end, signaling a pullback before the software giant finds a bottom, according to analysis by Peter DiCarlo in an X post on October 18.
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According to the expert, the potential deep might see the equity correct by 10% before finding grounds to mount another rally.
The analyst noted that the recent PLTR price movement indicates strength but could also point to overextension. Historically, such moves are often followed by periods of consolidation or retracement.
DiCarlo noted that Palantir’s share price will likely enter a compression phase, where the equity can either consolidate or drop to lower support zones. In this case, the consolidation phase would likely align with the traditional phases of the stock market.
As a reminder, DiCarlo stated that the market tends to move in three distinct phases: expansion, compression, and capitulation. Therefore, Palantir’s recent rally represents the expansion phase.
Another pointer for a possible pullback is the buy/sell pressure, measured by the BX Trend indicator. The expert explained that Palantir’s BX Trend shifts momentum from buyers to sellers, increasing the likelihood of a price drop.
PLTR share price’s next target
With these signals aligning, DiCarlo believes Palantir is headed for a pullback to around $40, a key support level. This represents a potential 10% decline from its current trading price. Despite the expected downturn, DiCarlo remains optimistic that this will create a buying opportunity for long-term investors.
“PLTR pulling back, and I still think we have another -10% before we find a bottom.<…> There’s a good chance price will pull back down into that market bias and test $40 before potentially making another rally back up into a higher high,” he said.
Similarly, in an analysis shared by a stock market analyst with the pseudonym Dividend Dude in an X post on October 15, the recent PLTR price rally might spell more trouble ahead. In this case, he suggested the soaring price, but with a 39.21x price-to-sales (P/S) ratio, the stock may be in bubble territory.
In this regard, such a high valuation suggests extreme optimism, leaving little room for error. This means that investors might be paying high premiums betting on the company’s growth, especially in artificial intelligence. Therefore, any slowdown in revenue or profitability could lead to a sharp correction, making the current price level unsustainable.
Analysts’ take on PLTR share price
Stock analyst Jake Ruth also shared this concern, warning that with a price above $40, the stock is “very expensive.” He cautioned that this outlook might not reflect the company’s true valuation. Some analysts have maintained that Planatir might be growing too fast and faces the risk of failing to sustain this momentum.
In the breadth of a bearish outlook, Finbold reported that Mizuho’ Greg Moskowitz sees PLTR underperforming, sharing a rating of ‘’sell‘’ despite upgrading the stock’s valuation from $24 to $30, citing expectations of strong figures from Palantir’s upcoming earnings report.
However, amid these concerns, some dissenting voices maintain that equity is on the right path, citing the company’s role in AI.
Wedbush’s Daniel Ives supports this optimistic outlook, raising his target from $38 to $45 with an ‘’Outperform‘’ rating. On the other hand, Mariana Perez of Bank of America (NYSE: BAC) sees the stock rising to $50 and recommends a “Buy” rating.
With such a mixed outlook, Planatir will be banking on fundamentals such as the company’s listing on the S&P 500 index and sustainable contracts from government and commercial clients.
