Palantir Stock Is Down 32% From Its Record High. History Says This Will Happen Next.

Core Insights - Palantir Technologies reached a peak share price of nearly 125 on February 18, resulting in a forward price-to-sales (P/S) ratio of 61, marking it as the best-performing stock in the S&P 500 during that period with a 625% increase since January 2024 [1][2][3] Valuation Concerns - Following disappointing economic data and tariff concerns, Palantir's stock has dropped 32% from its record high, indicating potential further declines based on historical performance of similar stocks [2][6] - Analysts have raised alarms about Palantir's valuation, with some stating it trades at an "unprecedented premium" compared to its software peers, highlighting the rarity of such high multiples in the industry [4][5] Historical Context - Historical data shows that every software stock that exceeded a forward P/S ratio of 50 in the past decade experienced a decline of at least 62% after reaching peak valuations, with an average decline of 77% [5][10] - If Palantir follows this trend, a peak-to-trough decline of 77% could bring its share price below 29 [6] Long-term Potential - Despite short-term volatility, analysts suggest that Palantir could still be a rewarding long-term investment, with projections indicating it could become a trillion-dollar company if it achieves 30% annual revenue growth over the next decade [7][8] - If Palantir's revenue reaches approximately $40 billion by 2035 and trades at a valuation of 25 times sales, it could imply a 400$200 billion [8] Cautionary Notes - While aggressive assumptions are made in long-term projections, it is advised to avoid investing in Palantir until it trades at a more favorable valuation [9]