Palantir (NYSE: PLTR) has experienced a significant surge since the start of the year, yet institutions continue to express doubts regarding the company’s long-term outlook.
A major driving force behind the recent positive momentum in Palantir’s stock price was the announcement on September 6 that the firm would be added to the S&P 500 index.
Looking at the performance over the year, PLTR has maintained a predominantly positive trajectory throughout 2024, boasting an impressive year-to-date increase of 120.87%.
Nevertheless, skepticism persists on Wall Street, where analysts remain troubled by Palantir’s elevated valuation.
Short-term traders also have reasons to be apprehensive, as a crucial technical indicator, the relative strength index (RSI), has recently fallen into overbought territory, achieving historically high levels. Concurrently, PLTR’s share price has surpassed its 200-day simple moving average (SMA) by 54%.
Moreover, the company’s dealings in surveillance could prompt negative media coverage, and its efforts to diversify revenue beyond government contracts toward commercial clients have yielded mixed results.
The average 12-month price target stands at $27.08, indicating a possible decline of 26.05% in share price, according to the latest Finbold data available at the time of writing.
Some analysts even project a drop to as low as $9, which would represent a drastic decrease of 75.4%, though this perspective is seen as relatively isolated.
Insider selling of PLTR shares
Although institutional investors have a bearish outlook for now, it’s also important to pay attention to insider activities, particularly the recent stock divestitures by Palantir’s CEO, Alexander Karp.
On September 16 and 17, Karp sold 4.5 million and 4.25 million shares, respectively, totaling $316 million.
While such transactions are not unusual, this sell-off is approximately 20 times larger than any of Karp’s previous sales.
This isn’t necessarily alarming—his decisions might be aligned with personal financial strategies or could suggest, at least in his view, that now is a good time to realize gains. Nonetheless, it does lend credence to the idea that PLTR’s recent rise might be limited.
Ultimately, it’s crucial to recognize that institutions have historically adopted a cautious stance towards PLTR, and although these concerns are substantiated by real factors, contrarians have had numerous opportunities to secure impressive profits since early 2023.
It’s worth mentioning that not all views on Wall Street are pessimistic—Bank of America, which projects that $50 price target, has drawn parallels between prevailing forecasts and past misjudgments by institutional investors regarding cell phone adoption in the 1980s. However, making a strong case for PLTR—despite such a lengthy timeframe—remains challenging given its current valuation.
The long-term trajectory of Palantir continues to be uncertain, and the present conditions do not appear to offer sufficient reasons for short-term or medium-term investments in the technology firm.
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