Palantir falls, extending slide to over 45% since hitting a record-high share price in January

Palantir
Palantir logo on New York Stock Exchange.

  • Palantir stock sank as much as 14% on Friday before mounting a slight recovery.
  • The fall extends the big data firm’s slide to over 45% since hitting a record high share price on Jan. 27.
  • Despite the fall, Cathie Wood’s ARK ETFs have continued to add exposure as the share price pulled back. 
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Palantir stock sank as much as 14% on Friday continuing its downward spiral since hitting record highs of $39 per share on Jan 27.

The Denver-based big data firm is now down more than 45% in a little over a month.

Palantir’s recent lockup expiration that released some 80% of the company’s shares to trade on the open market led to significant insider sales which have hurt the stock in recent weeks.

A surprise quarterly loss in the company’s fourth-quarter earnings results released in mid-February didn’t help either.

And now tech stocks are selling off amid rising Treasury yields as investors rotate out of the highly valued tech sector to more cyclical value names in financials and energy.

Despite the negative news, some institutional investors are using the fall in share prices as a buying opportunity. Two of Cathie Wood’s ARK exchange-traded funds added over 2.6 million shares of Palantir on Wednesday.

The purchase followed a February addition of some 6.8 million shares of the big data firm for Wood’s ARK Innovation ETF and ARK Next Generation Internet ETF.

Palantir also continues to ink contracts with big names like 3M and IBM.

On Friday the company signed yet another deal, this time with Amazon Web Services to provide Enterprise Resource Planning (ERP) systems “that enables rapid integration and analysis of data” for customers.

Goldman analysts argued Palantir’s recent quarterly results showed signs of “sustainable growth” and issued a “buy” rating and $34 price target for the big data firm. The analysts noted the significant backlog of deals in their report, some of which we have seen go through over the last month.

Overall though, analysts have become increasingly bearish on Palantir, often citing its stretched valuation. The company holds three “buy” ratings, three “neutral” ratings, and five “sell” ratings from analysts.

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Palantir slumps as a lockup expiration opens 80% of its shares for trading

Palantir 1
Palantir logo on the New York Stock Exchange.

  • Palantir’s stock sank on Thursday as a lockup expiration allowed 80% of the company’s shares to trade on the open market.
  • Citi analyst Tyler Radke warned of a potential fall due to the lockup expiration in a note to clients in January.
  • Cathie Wood, CEO of Ark Invest, said she still believes Palantir is headed in the right direction as it spends on innovation.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Palantir’s stock sank on Thursday after a lockup expiration freed some 80% of the company’s shares to trade on the open market. The stock was down as much as nearly 7% shortly after the opening bell. 

Palantir had seen its share price more than triple since going public before a surprise earnings loss on Tuesday hurt momentum. Still, the company’s stock was up roughly 185% over the last six months prior to Thursday’s fall.

When the Denver-based firm went public via a direct listing back in September, early investors were forced to hold their shares due to a lockup clause. Now that the clause has expired, it means a number of big investors in Palantir could be looking to cash out amid the recent rally in the share price. If they do, it could drive the stock down significantly.

Citi analyst Tyler Radke warned about such an event back in January. The analyst downgraded Palantir to “sell” in a note to clients, claiming the Big Data company’s high valuation, decelerating growth, and lock-up expiration could lead to a sell-off.

Some big-time Palantir investors have already said they “will continue to sell shares as permitted.”

Soros Fund Management, which revealed in November it began investing in Palantir in 2012 and owned 18.46 million shares at one time, has said it will continue to divest from the Big Data firm.

“SFM does not approve of Palantir’s business practices,” the firm said in a statement last year. “SFM made this investment at a time when the negative social consequences of big data were less understood. SFM would not make an investment in Palantir today.”

Palantir still has a bevy of supporters, including numerous analysts. Goldman Sachs analysts more than doubled their price target to $34 per share for the Big Data firm after Tuesday’s earnings, citing a path to “sustainable growth.”

Another big Palantir supporter is Cathie Wood, CEO of Ark Invest.

In an interview with CNBC on Wednesday, Wood said Palantir’s CEO Alex Karp was “speaking our language” in the quarterly conference call and that the company’s aggressive investments are the right path forward. Sacrificing near-term profitability for long-term growth is a net positive. according to Wood.

The CEO argued companies “have not been spending enough on innovation” and praised Palantir for its “refreshing attitude.”

“We don’t want profits now, we want them to invest aggressively,” Wood said.

Palantir stock traded at $25.93 as of 9:53AM E.T. on Thursday.

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