Palantir Stock ( NYSE:PLTR )
Palantir Technologies ( NYSE:PLTR ) is currently in an interesting position for potential investors. Because it is a high-growth stock, it is more sensitive to overall economic conditions and business cycles. Palantir stock was trading at around $17.5 a year ago, with a P/S ratio of 20x. To put things in perspective, Google ( NASDAQ:GOOGL ) trades at a 5x P/S ratio on average. PLTR’s stock price has dropped by about 60% to the current $6.6 range since 2022. Many of the sharp declines occurred at extremely high selling volumes.
Such a large price correction significantly deflated its bubble valuation, and there are many positives to be said about Palantir. First, the stock’s valuation is much more reasonable due to the previously mentioned 60% price decline. It has a P/S ratio of 7.3x. It is undeniably still quite expensive (Google currently trades at a 4.2x P/S ratio). However, a 7.3x P/S is no longer in an alarming bubble. Second, the potential for business growth is quite strong, particularly when/if overall economic conditions improve. The government sector is a significant and stable source of revenue. And the core business of Palantir is to develop and deploy software platforms that can serve as the central operating systems for its large government clients. One recent example is its collaboration with Lockheed Martin ( NYSE:LMT ) to accelerate the development of Aegis and the Navy’s future integrated combat software system.
However, there are some challenges. I will delve deeper into the stock’s positives and negatives in the following sections. However, for various reasons, stock prices will remain trapped in a single-digit trading range in the near future. My overall thesis is that long-term investors should wait for better opportunities. Sw...
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