‘Its Getting Hot in Here,’ Says Investor About Palantir Stock

Palantir Technologies (NASDAQ:PLTR) has continued its rapid ascent to the highest echelon of the technology world, attracting a wide array of satisfied customers from both business and government along the way.

Indeed, Palantir has joined an elite cadre of multibillion dollar tech firms – and it shows no signs of slowing down. Every quarter brings a new revenue record, and opportunities for growth are popping up left and right.

Earlier this year, it was announced that NATO will be collaborating with Palantir to help the alliance modernize its “warfighting capabilities.” The company is also angling to support President Trump’s “Golden Dome” missile defense project.

Not surprisingly, PLTR’s share price has rocketed into the stars, surging almost 500% over the last twelve months.

One investor known by the pseudonym The Abstract Investor believes that the exuberance has gone a bit too far.

“Palantir’s valuation is baking in exceptional growth and sales execution for the next five years,” explains the investor. “Frankly, that’s a little too forward into the future to bet on a technology company given the rate of disruption in our world.”

The investor details that the company’s growth will be “limited by human execution speed” – and therefore estimates need to factor in time for contracts, pilot programs, and software configurations. In other words, keeping growth sky-high is going to be quite the challenge.

To help explain the inflated valuation, The Abstract Investor points to Microsoft (“the greatest software business ever built”) to demonstrate the mismatch between Palantir the company and its share price. For instance, the $3 trillion plus Microsoft is trading at an EV/Sales multiple of around 13x.

“I for one, cannot understand nor contextualize, a 90X Enterprise Value to Sales,” adds the investor.

The Abstract Investor therefore urges caution, reminding investors that the prudent move is to avoid chasing upward momentum. That’s the case despite the fact that Palantir is clearly an “exceptional business.”

“Even generational technology businesses might not offer the best of returns and in this case, it’s wise to wait on the sidelines,” concludes The Abstract Investor, who rates PLTR a Sell. (To watch The Abstract Investor’s track record, click here)

While Wall Street is not heading for the exits, it is not exactly rushing to jump on board either. With 3 Buys, 11 Holds, and 4 Sells, PLTR has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $100.13 has a downside of ~19%. (See PLTR stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.