Investor Warns of Imminent Collapse for Palantir Shares

Palantir Technologies (NASDAQ: PLTR), a leader in big data analytics, recorded impressive financial results recently. The company’s revenue reached new heights, showcasing a year-over-year growth of 63%. Additionally, Palantir expanded its customer base significantly, increasing its commercial customers from 498 to 742 within just a year.

Investor Concerns Over Palantir Shares

Despite these strong results, investor sentiment has turned cautious. Since the recent earnings call, Palantir’s shares have dropped by 14%. This decline reflects a broader cooling of enthusiasm in the AI sector, as discussions about a potential AI bubble raise investor concerns.

Valuation Woes Amid Strong Performance

Investor Daniel Jones has expressed significant skepticism regarding the current valuation of Palantir. He argues that, while the company demonstrates operational excellence and robust growth, its stock price remains unjustifiably high. Jones notes that even under optimistic forecasts, Palantir’s Price-to-Operating Cash Flow and EV-to-EBITDA multiples might reach 45.7x and 41.3x, respectively, by 2028. This suggests a high-risk scenario for investors.

• Revenue Growth: 63% year-over-year increase.
• Commercial Customers: Rise from 498 to 742.
• Expected Multiples by 2028: Price-to-Operating Cash Flow: 45.7x; EV-to-EBITDA: 41.3x.

Jones maintains a “Strong Sell” rating for Palantir, citing that any sustained weakness in the AI market could lead to a significant drop in share prices. He emphasizes the importance of caution, stating that the current stock price cannot be sustained indefinitely.

Analyst Ratings and Market Outlook

On Wall Street, analysts have varying perspectives on Palantir’s future. Among 16 analysts surveyed by TipRanks, three recommend a Buy, 11 suggest a Hold, and two advocate for selling the stock. The average price target is set at $18.87, indicating a potential upside of around 6% from its current trading level.

With ongoing debates regarding the sustainability of the AI market and investor psychology, Palantir stands at a critical junction. Investors must conduct thorough analyses and consider multiple factors before making decisions on Palantir shares.