Palantir shares fall for consecutive days, dropping by 20% each time.
Palantir Stock Falls 20%: Opportunity or Time to Sell?
In a abrupt turn of events, the Palantir Technologies stock has seen a 20% decline yesterday, following a steep drop on February 19. The tech company, specializing in data analysis and serving both governmental and commercial clients, is heavily reliant on the U.S. Defense Department as its primary customer.
In a memo made available to The Washington Post, U.S. Defense Secretary Pete Hegseth outlined plans for an eight percent reduction in the defense budget over a five-year period, which could pose a risk to Palantir given its dependence on military contracts. Furthermore, CEO Alex Karp announced plans to sell nearly ten million shares within the next six months, a move that typically creates uncertainty among investors.
Yesterday's decline comes weeks after Palantir reported first-quarter revenue growth for 2025, with a 39% year-over-year increase globally and a 55% increase in U.S. commercial revenue. This growth led to an increase in the full-year revenue guidance, now expected to rise by 36% year-over-year, with U.S. commercial revenue guidance set at 68% year-over-year growth.
One analyst resistant to the current market fluctuations is Dan Ives of Wedbush, who wrote on Thursday: "We believe Palantir's unique software approach will enable the company to secure more budget dollars within the Pentagon ... and not less, despite the initial reflexive reactions of Wall Street."
Other analysts remain cautious, urging investors to hold the stock and projecting a potential downside of approximately 18% to a $120 average price. Despite the potential for short-term declines due to market volatility, attractive buying opportunities may still emerge in the near future.
In considering whether to buy or sell Palantir Technologies (WKN: A2QA4J), investors should weigh their investment goals, risk tolerance, and market outlook. For those optimistic about the company's long-term growth potential, driven by its impressive revenue growth and improved financial metrics, buying may be an attractive option. Conversely, investors concerned with market volatility might prefer to sell and re-evaluate their positions at a later time. Ultimately, informed decision-making may require careful analysis of the company's financials and market conditions, possibly in consultation with financial advisors.
Investors interested in technology and artificial-intelligence sectors might find the recent 20% decline in Palantir Technologies' stock appealing for potential purchases, given analyst Dan Ives' belief in its unique software approach securing more budget dollars within the Pentagon. However, the company's dependence on military contracts and CEO Alex Karp's plan to sell shares could pose a risk, necessitating cautious investing or even selling, particularly when considering market volatility and the U.S. Defense Department's budget reduction plans.
