This Wall Street Analyst Thinks Palantir Stock Will Plummet 70%. Is He Right?

Core Viewpoint - Palantir Technologies has experienced significant stock price volatility, with a notable decline of nearly 20% from its all-time highs, and an analyst suggests a potential further drop to a price target of $45, indicating a 70% decrease from current levels [1][2]. Group 1: Company Performance - Palantir has established itself as a leader in the practical deployment of AI, providing platforms that process large data streams and deliver actionable insights [4]. - The company serves two major client bases: government and commercial sectors, with government revenue rising 49% to $553 million and commercial revenue increasing 47% to $451 million in the second quarter [5][6]. - Palantir is highly profitable, converting 33% of its $1 billion in revenue into net income, showcasing strong financial health [6]. Group 2: Valuation Concerns - Despite impressive growth, Palantir's stock has seen a dramatic valuation increase, trading at 115 times sales and 241 times forward earnings, which raises concerns about overvaluation [9]. - The stock has risen over 2,300% since 2023, while revenue has only increased by 80%, indicating a significant mismatch between stock price and revenue growth [8]. - Comparatively, Nvidia, a leader in AI, has never traded at more than 50 times sales or forward earnings, suggesting Palantir's current valuation is excessively high [11][13]. Group 3: Market Outlook - The market appears to have priced in substantial future growth for Palantir, but the current stock price may not reflect a reasonable valuation based on its growth trajectory [15]. - While there is optimism about Palantir's future success, the stock is considered one to avoid until it reaches a more reasonable price level [15].