How Palantir Stock Falls To $80

Core Viewpoint - Palantir Technologies has experienced significant stock growth, more than doubling in value this year, driven by interest in generative AI and new government contracts following the re-election of Donald Trump as U.S. President [1][2] Financial Performance - Palantir's Q2 revenue grew 48% year-over-year, exceeding $1 billion, and the company raised its full-year revenue guidance to between $4.14 billion and $4.15 billion, up from a previous forecast of $3.89 billion to $3.90 billion [1][2] - Adjusted operating margins improved to 48%, up from 37% in the year-ago quarter [2] Market Dynamics - The U.S. government segment saw a revenue increase of 53% year-over-year, reaching $426 million in the last quarter [5] - Broader market conditions remain challenging, with inflation and job market softness posing risks to future growth [4] Valuation Concerns - Palantir's stock is trading at a high valuation of approximately 255x forward earnings, making it susceptible to significant pullbacks [4][10] - The company's revenues have grown at an average annual rate of 24% over the past three years, but this growth does not justify the current stock valuation [10] Risks and Challenges - Government contracts are unpredictable, which complicates future revenue forecasts [5][6] - The reliance on federal contracts exposes Palantir to political risks, including shifts in government priorities and potential budget cuts [6] - The commercial market, while showing growth, faces challenges in scaling beyond large enterprises due to complex and expensive implementations [7][8] Historical Performance - Palantir stock has shown volatility, losing over 70% of its value during economic stress in 2022, while the S&P 500 declined about 25% [9] - The stock has recovered to a high of $160.66 as of early August 2025, but historical trends indicate potential for steep declines if market sentiment shifts [9]