- Palantir stock price has crashed into a bear market after falling by 30% from its all-time high.
- The sell-off mirrors the performance of other software companies.
- The stock may continue falling as it remains in the markdown phase of the Wyckoff Theory.
Palantir stock price remains in a bear market after crashing by 30% from its highest point in October last year, a move that has erased billions of dollars in value. This retreat has coincided with the ongoing sell-off in software stocks. So, will the highly overvalued PLTR stock rebound?
Top Reasons Why Palantir Stock Price Has Crashed
The PLTR stock price has entered a bear market this year for several key reasons. First, the sell-off has coincided with the plunge in other software companies, which have dropped amid concerns about disruption from artificial intelligence (AI) tools.
Some of the other top laggards include Atlassian, AppLovin, Adobe, ServiceNow, Intuit, and Microsoft.
Additionally, the stock has plunged amid persistent valuation concerns. For example, Seeking Alpha data shows that the company has a forward PE ratio of 112, much higher than the sector median of 21.
In contrast, a fast-growing company like NVIDIA has a multiple of 20. The S&P 500 Index has a forward PE ratio of 19, while top companies like Broadcom and Micron have multiples of 30 and 8, respectively.
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To be clear: Palantir deserves a premium valuation because it is one of the fastest-growing companies in the United States. Analysts expect its annual revenue to be $7.2 billion, up 62% YoY, followed by $10.4 billion next year. Its earnings per share are expected to grow from last year’s 75 cents to $1.32 this year, followed by $1.86 next year. Still, a 112x multiple seems too high.
Palantir stock is also retreating as investors book profits after it soared by over 3,000% from its 2023 low to its peak last year. Technically, this could be a sign that the stock has entered the distribution or markdown phase of Wyckoff Theory.
The most recent financial results showed that Palantir’s business continued to perform well in the fourth quarter, with revenue jumping 70% to $1.4 billion and quarterly profit hitting $609 million. This growth is being driven by the commercial segment, with the US business expected to bring in $3.4 billion this year.
Wall Street analysts remain highly bullish on Palantir’s stock ahead of its earnings on May 4. Analysts estimate its stock will jump to $197, up nearly 40% from the current level. Some of the most bullish analysts point to its rule-of-40 multiple, which stands at 127%.
PLTR Stock Price Technical Analysis
The weekly chart shows that PLTR stock price has slumped from its all-time high of $207 in October to $147 today. It has already moved below the 23.6% Fibonacci Retracement level at $160 and formed a head-and-shoulders pattern.
The stock appears to have formed an island reversal pattern, which typically occurs after a gap-up. Therefore, the most likely Palantir share price forecast is bearish, with the next key target being the psychological level at $100, which is slightly above the 50% Fibonacci Retracement level.
In the future, however, the stock will likely bounce back and retest the all-time high of $207.
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