Brent Thill, an analyst from Jeffries just downgraded Palantir Technologies (PLTR, Financial) from “Hold” to “Underperform” and maintained Palantir's price target of $28 per share. He stated Palantir as high valuation and slowing growth and his best advice is to “Stay away”. Below are three main points that he shares about Palantir:
Overpriced
Palantir's stock price indeed experience a significant surge of 237.26% year-over-year since 2023. The surge largely driven by the adoption of its Artificial Intelligence Platform (AIP) and strong partnerships with major clients including governments from many countries. Despite having very good growth with strong fundamentals, Thill assumed that Palantir at $64.35 per share is overvalued.
Insider trading
The overvaluation might be clarified by the insider selling of the company's stock which has escalated over the last few months, at the meantime the share price continues to soar. Alex Karp, the CEO of Palantir itself already sold about 40 million shares in the past three months that translating to over $1.9 billion. That already include the selling of 18 million shares that worth more than $1 billion In the past 14 days. To date, he has lost around 20% stake of his overall stake. However, the former still has authorization based on the existing Rule 10b5-1 trading plan. According to the trading plan he still authorized for selling an extra ~9 million shares up to May 2025. This could potentially lead to a “further overhang for the shares” said Thill.
Retail ownership declined
After the S&P 500 inclusion, retail ownership declined 7 points to 42% while index ownership increased 4 points to 25% and 3 points for institutional (like mutual or pension funds) ownership to 27%. If more institutional investors buy the stock that might lead to stable and less volatile price. Less volatile price is not much favored by retail traders and could cause lower stock prices in the future.
If Thill suggests Palantir to be $28 only per share, 16 analysts give Palantir the one-year price targets with the average price at $38.88with a high estimate of $75.00 and a low estimate of $11.00. The average target implies a downside of -39.58% from the current price of $64.35.
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