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Can Palantir Maintain Its High-Flying Status Amid AI Market Volatility?

Pre-Market Price Info

Palantir Technologies Inc. (NYSE: PLTR) closed yesterday at $24.00.

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Latest News

Palantir Technologies has been riding high on the AI wave, becoming a favorite among investors and tech enthusiasts. However, recent analyses suggest that the company's valuation might be overextended. With a price-to-earnings (P/E) ratio of 72x for 2024 and a price-to-sales ratio climbing from 7x to nearly 20x over the past 18 months, Palantir's valuation far exceeds industry averages.

A major concern is the insider selling activity. Since March 2024, insiders and management have sold about $250 million worth of shares. This heavy selling raises questions about the internal confidence in the company's near-term prospects. Despite robust earnings and sales growth projections of around 20% annually into 2027, the company's high valuation leaves little room for error.

Technical momentum for Palantir is also mixed. The stock's price of $24 is well below its March high of $27, and several momentum indicators like the Ease of Movement and Negative Volume Index suggest limited buying interest and potential overhead supply issues. These factors, combined with a sliding On Balance Volume, add to the skepticism surrounding Palantir's ability to sustain its current valuation without a significant positive catalyst.

Target Price and Analysts' Ratings via Moomoo

• William Blair: As of June 7, 2024, they have a "Sell" rating.

• BofA Securities: As of June 7, 2024, they rate Palantir a "Buy" with a target price of $28.

• Moomoo: The average target price stands at $22.70.

Technical Insights

On X, @drizzy_charts highlighted a potential technical pattern: "Palantir Technologies $PLTR potentially a HUGE cup and handle pattern playing out here on the weekly time frame. If we see a strong breakout of the handle then we can see $26.50-27.50, if we can get through that, then $30 should be no problem."

For more in-depth analysis, check out our newest video right here!

With a valuation that appears stretched and insider selling raising red flags, is Palantir poised for a correction, or can it defy the odds and continue its ascent? Investors need to weigh these factors carefully before making their next move.

What do you think, folks? Can we get a breakout for $30 in the coming days?!

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