Palantir Technologies (NASDAQ:PLTR) shares had a brutal day, sinking 10% during regular trading and tumbling another 5% after hours. Investors are clearly on edge – so what’s behind the sell-off?
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For one, CEO Alex Karp just unveiled plans to offload up to 9.98 million shares – valued at a hefty $1.23 billion – by September 2025. That kind of insider selling doesn’t exactly inspire confidence.
But that’s not the only red flag. Reports indicate the U.S. defense budget could face annual cuts of 8% over the next five years. Given that government contracts make up over 40% of Palantir’s revenue, such a development isn’t sitting well with investors.
And in what might be unfortunate timing, Loop Capital analyst Mark Schappel picked today to initiate coverage on PLTR with a Buy rating and a $141 price target – implying a 26% upside. (To view Schappel’s track record, click here)
“With roots in data mining for defense, intelligence, and government agencies, the company has established a solid track record of growth, scale, continuous innovation, and creating leading edge use cases. Just looking at Palantir’s numbers, the firm runs a $2.9B revenue run rate business that profitably grew 29% last year and is accelerating. This is even more impressive considering that the company should top $3.8B in revenues during 2025,” Schappel opined.
Doubling down on his bullish stance, Schappel points to the company’s highly efficient go-to-market strategy, which delivered impressive results last year – 39% non-GAAP operating margins and 44% free cash flow margins. This performance catapulted the firm into the elite ranks of ‘Rule of 60’ software vendors, hitting a stellar Rule of 68 for 2024 and an even stronger Rule of 81 in Q4 (calculated as revenue growth plus non-GAAP operating margins).
“Because the market is just getting started and because the use cases around Enterprise AI are exploding and are nearly endless, implying few TAM constraints on growth, we think there’s room for Palantir to increase more than 5x in size before bumping up against any presumed ceiling,” the analyst added.
That sounds convincing, but the rest of the Street beg to differ. Based on a mix of 2 Buys, 10 Holds, and 5 Sells, the analyst consensus rates PLTR stock as a Hold (i.e., Neutral). The average price target suggests that most believe the shares are too expensive right now; at $88.60, it points toward a 21% decline over the one-year timeframe. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
