Palantir stock price forms a risky pattern as a persistent risk remains

Palantir stock price has sunk in the past few days as the recent rally faded and as investors started booking profits amid valuation concerns. PLTR dropped for five consecutive days, reaching a low of $167, its lowest level since December 1 and ~20% from its highest point in 2025. 

Palantir stock has retreated amid valuation concerns

PLTR stock has pulled back and moved into a technical bear market as investors remain concerned about its valuation. These concerns have escalated as it moved above the average estimate by Wall Street analysts.

Data compiled by MarketBeat shows that the average estimate among 24 analysts is $172, lower than the all-time high of $207, which it hit in November last year. 

The most optimistic analyst is from Bank of America, who sees it rising to $255. Mizuho analysts see it reaching $205, while Wedbush’s Dan Ives sees it rising to $200. Most analysts, however, believe that the stock has more downside, with Northland Securities and RBC expecting it to drop to $18 and $50, respectively. 

Most analysts appreciate that Palantir is a solid business whose growth is accelerating. However, there are concerns about its elevated valuation and insider sales.

Palantir has a market capitalization of over $400 billion, a sizable figure for a company with annual revenue of $2.3 billion in 2024. Analysts expect the financial results to show that its revenue rose to $4.41 billion last year and $6.3 billion this year, representing 53% and 43%, respectively.

Palantir has a forward price-to-earnings ratio of 231, much higher than that of other companies. The sector median is 24.80, while the valuation metric is much higher than other companies. 

A good example of this is Nvidia, which is experiencing a higher growth rate and has higher margin.  Palantir has a net income margin of 28%, much lower than Nvidia’s 53%. Yet, Nvidia has a forward price-to-earnings ratio of 40. 

Palantir’s management points to its rule-of-40 valuation metric, which looks at its revenue growth and its profitability. In this case, the management noted that its rule-of-40 ratio stood at 114%, meaning that its business is balancing between its revenue and profitability well.

Palantir’s commercial growth is accelerating 

The most recent results showed that Palantir’s revenue rose by 63% in the third quarter, helped by its US commercial business, whose revenue rose by 121%.  The government revenue rose by 52% to $486 million as the US government revenue continued growing.

Palantir’s commercial business also continued doing well as it closed. 204 deals of at least $1 million and 91 deals of at least $5 million. This growth will likely continue as more companies embrace its technology to gain an edge on their competitors. Also, companies are using its technology to save costs, with Lear cutting costs by about $30 million annually.

The company has also recently announced a large partnership with Nvidia. As part of the deal, Nvidia’s models will be available through AIP. 

Therefore, Palantir’s business will continue accelerating, with its annual revenue reaching the $10 billion milestone either in 2028 or 2029. The main issue, however, is that there is little way to justify the valuation as its net income will be about $3 billion, giving it a hypothetical forward price-to-earnings ratio of 133.

The valuation concerns also likely explain why top insiders have continued dumping that stock recently. Insiders sold shares worth over $849 million in the last 12 months, with their ownership falling to 12.93%. These insiders include people like David Glazer, Alexander Karp, Ryan Taylor, and Shyam Sankar.

Palantir stock price technical analysis 

The daily timeframe chart shows that the PLTR stock price has crashed from the year-to-date high of $207 to the current $167. This retreat was in line with our previous PLTR forecast.

A closer look shows that it has remained at the 50-day and the 100-day Exponential Moving Averages (EMA). 

Also, it has formed a head-and-shoulders pattern, a common bearish reversal sign in technical analysis. This pattern also has a close resemblance to a diamond, which is another reversal sign.

Therefore, there is a risk that it may drop in the coming weeks, potentially to the key support level at $150.

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