Palantir Stock: Buy the Dip Down 20%?

Palantir NYSE:PLTR

Amid the flurry of investment decisions, few scenarios evoke as much interest and debate as a significant stock pullback. Palantir Technologies (NYSE:PLTR), a notable player in data analytics and artificial intelligence (AI), finds itself at the epicenter of these discussions following its recent earnings report. PLTR experienced a downturn as Wall Street reacted to its sales guidance, sparking deliberations among investors regarding the optimal course of action.

Of particular significance is the endorsement by analyst Dan Ives from Wedbush, who perceives the post-earnings decline as a “golden buying opportunity.” As investors weigh their options, the pivotal question arises: Is now the opportune moment to capitalize on the dip in Palantir stock? Let’s delve deeper.

About Palantir Technologies Stock

Established in 2009, Palantir Technologies Inc. (NYSE:PLTR) specializes in developing and deploying software platforms for data analysis, serving a global clientele with solutions catering to various data types, including structured, unstructured, relational, temporal, and geospatial.

Palantir Technologies’ shares have surged by 112.3% over the past 52 weeks, outpacing the broader S&P 500 Index’s 27.5% gain during the same period. However, the stock is currently down approximately 21% from its early March highs.

Recent News For PLTR Stock

On April 18, Palantir engaged with advertising agencies to explore the utilization of its year-old AI platform, AIP, aiming to expand its commercial business. AIP showcases diverse applications for tasks such as pricing, inventory planning, programmatic sales, and campaign optimization.

On April 17, Palantir was designated as an “Awardable” vendor for the Chief Digital and Artificial Intelligence Office’s Tradewinds Solutions Marketplace. Two of Palantir’s product offerings, namely, its AI Mission Command Capability and its Predictive Maintenance & Precision Sustainment Suite, have been incorporated into the Marketplace to support critical missions across the Department of Defense.

On April 5, Oracle (NYSE:ORCL) and Palantir unveiled a collaboration to deliver secure cloud and AI solutions, combining Oracle’s distributed cloud and AI infrastructure with Palantir’s advanced AI and decision acceleration platforms to empower businesses and governments globally.

Palantir Reports Solid Q1 Results, But Full-Year Sales Outlook Disappoints

On May 6, Palantir Technologies announced its Q1 earnings results, reporting a 20.8% year-over-year increase in total revenue to $634.33 million, primarily driven by rising demand for its AIP. Despite surpassing consensus estimates, the company’s stock witnessed a single-day drop of over 15% due to disappointing full-year sales guidance.

Management expects revenue to range between $649 million and $653 million in the second quarter, with adjusted income from operations projected between $209-$213 million. The company increased its revenue guidance for the full fiscal year 2024 but fell short of analysts’ expectations, leading to the stock’s decline.

PLTR Stock Valuation And Risks

Assessing Palantir’s valuation, the stock is currently trading at approximately 66 times the consensus earnings estimate for 2024, which surpasses the sector median but is lower than its five-year average. However, the company’s valuation appears expensive, necessitating sustained growth rates to justify it.

Investors should also consider risks, including the potential for increased competition in the AI space and the uncertainty of maintaining market leadership. Additionally, Palantir’s reliance on continuous innovation to stay ahead poses inherent risks.

Options Market Sentiment

Examining the June 21, 2024, option chain for PLTR reveals a preference for call options at the $22.00 strike price, indicating expectations for a potential rise in the stock price.

What Do Analysts Expect For PLTR Stock?

Palantir stock has a consensus “Hold” rating, with varying opinions among analysts. While some advocate for buying the dip, others remain cautious. The mean target price for PLTR stock suggests a slight discount to Friday’s closing price, although the street-high price target implies significant upside potential.

The Bottom Line On PLTR Right Now

Considering Palantir’s standing in the AI space, robust performance in the first quarter, absence of debt on the balance sheet, bullish options market sentiment, and prospects for future growth, the recent pullback presents a compelling opportunity for investors, as endorsed by Wedbush Securities analyst Dan Ives.

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