Palantir stock is having a rough year as investors rotate out of software names and into memory plays like Sandisk and Micron. PLTR has fallen 36% from its all-time high last year, but despite the pullback, the company still has notable catalysts that should support stronger performance over the long term.
Palantir Technologies is doing well despite a falling stock price
Palantir is a top technology company that offers its services to companies and governments globally. It largely offers three products: Gotham, Foundry, and Artificial Intelligence Platform (AIP).
Gotham, its flagship product, is used by government agencies to identify threats and deliver actionable intelligence. Foundry, on the other hand, combines data analytics and predictive modelling to help companies with supply chain management, risk forecasting, and quality assurance.
AIP, its newest product, is a product that lets customers deploy large language models (LLM) and AI agents against their own data. It also has Apollo, an orchestration engine that deploys, integrates, and manages platforms across the cloud, on-premises, and classified networks.
Palantir, a highly controversial company, has continued doing well in the past few years, helped by the robust government and corporate spending. Its annual revenue has jumped from $1.5 billion in 2021 to $4.47 billion last year.
The most recent financial statement showed that its revenue jumped by 85% in the first quarter, driven by its US business, which grew by 104%. It made $1.6 billion in Q1, more than its 2021 revenue.
This growth happened as more large companies became its customers. It closed 206 deals worth at least $1 million and 72 deals worth at least $5 million. This growth will likely continue as more companies embrace its technology. Its total contract value (TCV) during the quarter rose to over $2.41 billion.
Analysts expect this growth to continue
Third-party data shows that the company’s business will continue growing. Yahoo Finance numbers show that the average estimate is that its quarterly revenue will jump by 80% to $1.8 billion. The estimate is that its annual revenue will soar by 72.4% to $7.72 billion.
Palantir has a long history of beating analyst estimates, meaning that its numbers will likely be better than estimates. As such, there is a likelihood that its annual revenue will cross the $8 billion mark this year.
This view likely explains why analysts expect its stock to do well over time. DA Davidson’s Gil Luria recently upgraded the stock from neutral to buy, with the target moving from $165 to $175. Wedbush’s Dan Ives has an outperform rating, while Rosenblatt Securities has a target of $225.
Some analysts have slashed their ratings, with Benchmark and BTIG lowering to hold and neutral, respectively. A key concern is that the company is highly overvalued, with its forward price-to-earnings (PE) ratio being 88.
Still, the company justifies its valuation metrics by pointing to the Rule-of-40 metric, which stands at 145%. This metric is calculated by adding a company’s revenue growth and its profit margins.
Palantir stock technical analysis
PLTR stock chart | Source: TradingView
The weekly chart shows that the PLTR stock has slumped in the past few months and bottomed at $106, which coincided with the 50% Fibonacci Retracement level. This retracement connects its lowest level in 2022 and its all-time high.
The stock also formed a falling wedge pattern, which is formed by two descending and converging trendlines. It also settled at the 100 moving average.
Therefore, the stock will likely bounce back, potentially to $160, the 23.6% Fibonacci Retracement level.
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