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Palantir Stock Should Be Avoided Until Enthusiasm Returns

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Palantir (NYSE: PLTR) stock at https://www.webull.com/newslist/nyse-pltr has been driven by stockholderinsight rather than rudiments since last November. Using traditional valuation metrics to value this big data company’s stock has proven to be a fool’s errand so far.

PTR is a stock that is traded on the stock exchange.

The stock’s high valuation can be attributed to its promising growth prospects. But I’m guessing it has more to do with qualitative factors—specifically, its close ties to the United States federal government. Furthermore, Palantir is thought to have cutting-edge proprietary technology.

That isn’t set in stone, of course. The company may be able to deliver enough results and new developments to justify its current valuation. But don’t hold your breath for a quick return to the stock’s all-time highs. It will take some time for this once-hot stock to regain its popularity.

The Bull Case for PLTR Stock and Its Flaws

The bull case for Palantir stock appears to be sound at first glance. When it comes to doing business with the federal government, there’s plenty to suggest it has a significant advantage over rival data analytics firms. As a defense, national security, and civilian agencies increasingly rely on data rather than firepower/workforce, names like this one will secure a larger share of federal contracts.

Investors have practiced this to indicate that the company can continue to grow at a 30%+ rate. However, as I previously stated, it is unclear whether this will be the case. Its rise in the government sector may come to a halt sooner than expected. With that, it’ll have to rely on its commercial segment to help make up the difference. However, as Carter Copeland of Melius Research noted in his firstforecaster coverage of Palantir, profitableevolution has been slower than expected. Copeland has a “hold” rating on the stock and a $20 price target, but he is on the fence about it because of the company’s mixed success in expanding its commercial book of business.

The analyst is more optimistic about the company’s government operations. However, he emphasizes that the firm is still a minor player in the contracting industry. In other words, investors may be exaggerating the company’s actual power and influence within the Beltway. Sure, the stock’s critics haven’t been able to match investor enthusiasm for it so far. However, as evidenced by its lackluster reaction to recent contract wins, interest in this stock is waning. New developments don’t seem to be moving the needle as much as they used to. The company received word on April 5 that it had won a contract with the National Nuclear Security Administration (NNSA). The stock of PLTR received a brief boost as a result of this. However, since then, shares have fallen back to their pre-announcement levels. This makes sense; an $89.9 million contract isn’t exactly a game-changer. You can check other stocks like nasdaq msft at https://www.webull.com/quote/nasdaq-msft before investing.

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