Palantir is experiencing sharp declines, erasing the 11% growth recorded at the close of the November 15 session.
The initial rally followed the announcement that Palantir would shift its stock listing from the New York Stock Exchange to the Nasdaq.
This move is expected to drive significant capital inflows into PLTR due to its automatic inclusion in funds with substantial assets under management.
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However, the momentum was short-lived. PLTR stock has wiped out most of its gains, plunging over 7% in the last 24 hours to trade at $60.99 as of press time. At some point, the stock crashed by as much as 10%, dropping below $60 before reclaiming it as support
Triggers of PLTR’s pullback
The software giant’s sharp sell-off can be attributed to a now-deleted X post by Palantir board member Alex Moore. In the controversial post, Moore took a combative tone toward critics regarding the company’s upcoming shift to Nasdaq.
In the post, he claimed the move to Nasdaq aimed to ‘force billions in ETF buying’ and reward ‘retail diamond hands.’
The post has raised questions about the company’s governance and priorities, particularly when some analysts maintain that Palantir might be overvalued.
Therefore, the incident has spooked investors, raising questions about Palantir’s overall strategic communication and corporate image.
In this context, the ‘tendies’ mentioned by Moore refer to financial rewards that follow a successful investment wager.
Concerns about PLTR shares valuation
Indeed, throughout 2024, Palantir has delivered impressive growth, outperforming the market thanks to its ability to serve enterprise and government artificial intelligence clients.
However, with a market cap of almost $150 billion against $2.6 billion in annual revenue, some believe the stock is in a bubble.
At the same time, the current PLTR share price drop has accelerated the debate about whether the stock is bound to drop further, considering the valuation concerns.
Critics warn Palantir could face a fate similar to past bubbles like Super Micro Computer (NASDAQ: SMCI) and Cisco Systems (NASDAQ: CSCO), questioning the sustainability of its valuation amid soaring investor expectations.
Some Wall Street analysts argue that the stock might already be pricing in its future growth, making it vulnerable if the company fails to meet its targets.
This move has divided Wall Street analysts, with Jefferies’ Brent Thill downgrading PLTR stock to ‘Underperform,’ citing unsustainable gains and setting a $28 price target. Similarly, Mizuho’s Matthew Broome expressed concerns about the valuation, assigning a bearish $37 target.
In contrast, Wedbush’s Dan Ives remains bullish, describing Palantir as the ‘Messi of AI’ and a leader in the AI revolution.
Featured image via Shutterstock
