Palantir (NAS100:PLTR) bounced this week near the key support as investors remain mixed.
The price of PLTR has jumped this week after a dip back toward the February high. That was an important buy zone as it led to the sharp losses and April lows.
Palantir is maybe the hottest stock to follow for volatility at this moment, which was highlighted by the surge from the April lows that outperformed any rebound by the likes of Tesla and even Nvidia.
The stock has gained 740% since the start of 2024 and the sharp drop in April was quickly bought by investors. Investors still remain mixed on the outlook for the company at the current levels.
On one side, the CEO’s close ties to billionaire Peter Thiel, and thus, the US President is a positive. Growing contracts from government agencies and military is also seen as a long-run supply of revenue for the firm.
On the other side is the current stock valuation, which is seen by many as unsustainable. The April downward move highlighted what can happen if the buying volume fades.
The valuation is huge at the moment with a forward price/sales ratio of 80x. That compares to more legacy companies that usually trade around 5x sales depending on their business model. But investors are happy to remain bullish due to its competitive advantage and leader. The company also has $5.4 billion in cash with no debt, which means it is not under pressure to perform in the near-term.
Palantir management recently revised its full-year 2025 guidance to 36%.
Citadel Advisors, founded by billionaire Ken Griffin, dumped 1.5 million shares of Nvidia this year, while building up his position in Palantir by more than 200%, with an additional 902,400 shares. It highlights that even the largest investors are seeing a larger runway for AI growth in Palantir once the demand for AI chips slows for Nvidia.
However, another billionaire was seen selling recently with Stanley Druckenmiller selling his entire stake in the company. His preference was to move to a $100 million stake in Taiwan Semiconductor.
The stock is currently showing good volume for traders, but the move to April lows highlights the risks involved with holding for a larger move.
