Why Palantir Stock Is Crashing Today

1 month ago 22

Johnny Rice, The Motley Fool

Tue, May 6, 2025, 10:27 AM 3 min read

Shares of Palantir Technologies (NASDAQ: PLTR) are falling connected Tuesday. The company's banal slid 14.1% arsenic of 10:10 a.m. ET and was down arsenic overmuch arsenic 14.6% earlier successful the day. The determination comes arsenic the S&P 500 and the Nasdaq Composite fell by 1% and 1.2%, respectively.

Shares of the large information analytics and artificial quality (AI) bundle institution were falling aft the institution released its first-quarter earnings.

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Palantir reported Q1 net per stock (EPS) of $0.13 connected income of $884 million. The company's gross was up 39% twelvemonth implicit year, beating Wall Street expectations. The beardown maturation was driven chiefly by large U.S. sales, up 55% twelvemonth implicit year. Expecting this U.S. spot to continue, Palantir raised its 2025 full-year forecast.

Despite the seemingly affirmative report, determination was a cardinal weakness that led to today's banal slide: Global income declined 10% twelvemonth implicit year. The planetary weakness is simply a concerning motion that calls into question Palantir's quality to proceed its wide maturation astatine the existent pace.

A drone flies successful the sky, firing 2 missiles.

Jefferies expert Brent Thill was acrophobic that Palantir couldn't proceed justifying the massively inflated valuation of its stock, saying, "While fundamentals person strengthened successful caller quarters, [Palantir's valuation] has risen to unprecedented levels." He went connected to picture it arsenic "irrational."

I agree. Its price-to-earnings ratio (P/E) of 650 is overmuch excessively high. There is nary uncertainty that Palantir, by and large, is executing astatine a precise precocious level. A valuation this precocious means it indispensable execute perfectly for years. The shrinking planetary request calls into question its quality to bash so. I would enactment distant from this banal unless it retreats importantly to a level that could beryllium considered rational.

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