Why Palantir Stock Is Falling (Again) Today

Shares of even the most successful companies can crash when valuations get this disconnected from reality.

| More on:
Key Points

This article first appeared on our U.S. website.

Shares of Palantir (NASDAQ: PLTR) are falling once again. The stock is down about 2% as of 2 p.m. Wednesday after having dropped as much as 5% earlier in the day. Palantir stock gave up nearly 8% Tuesday and has been on a downslide since Aug. 12.

The AI-powered company is seeing its share slide as part of a larger sell-off in tech, as concerns over the health of the U.S. economy mount. Given its sky-high valuation, Palantir’s stock is getting hit especially hard.

PLTRCrash

Palantir stock plunges as tech sell-off intensifies

Among the companies that actually take artificial intelligence (AI) and apply it in the real world, Palantir has been a notable standout, delivering massive revenue and earnings growth while rivals like C3.ai and BigBear.ai are still operating deep in the red and seeing their sales stagnate.

That’s led investors to pile into Palantir stock, which has reached an astronomical valuation of nearly 500 times earnings. That’s not a particularly sustainable valuation, and as concerns mount after recent jobs data showed a slowing economy, many investors are rotating out of riskier tech stocks sitting near record highs.

Citron Research takes aim at Palantir’s valuation

Palantir was also the target of a short report from one of the most prominent short sellers on the market, Citron Research, which pointed out that after OpenAI’s latest funding round, it is valued at roughly 17 times its sales. Palantir’s stock carries a price-to-sales (P/S) multiple nearly seven times that of OpenAI — the company at the very heart of the AI boom. Citron believes this is not rational.

I agree. Palantir may be firing on all cylinders, but its stock is disconnected from reality, and until it comes back down to earth, I personally would not invest.

Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Palantir Technologies. The Motley Fool has a disclosure policy.

More on Tech Stocks

man touches brain to show a good idea
Tech Stocks

The 1 Number Telling Investors This Selloff May Be Nearly Over

MDA Space is down sharply from its high, but its latest results suggest demand is accelerating, not fading.

Read more »

Illustration of data, cloud computing and microchips
Tech Stocks

Kinaxis’s Niche AI Strategy Is Paying Off

Kinaxis (TSX:KXS) is turning specialized supply chain AI into stronger recurring revenue, new customer wins, and a strong long-term growth…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Tech Stocks

I’m Holding These 2 Canadian Stocks in My TFSA for Life

Understand the life cycle of stocks and why some deserve a permanent place in your investment strategy through a TFSA.

Read more »

container trucks and cargo planes are part of global logistics system
Tech Stocks

Meet Kinaxis, the Canadian AI Stock That Actually Makes Money

Kinaxis is an AI-driven supply-chain software company that’s already profitable, but the stock’s valuation leaves little margin for error.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why I’m Not Worried About This Stock’s 37% Drop

Despite a drop in Celestica's stock, future revenue from hyperscalers could significantly impact its market position.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

Skip the Speculation: These Canadian AI Stocks Already Have the Earnings to Prove it

Kinaxis stock has surged by 20% this month, perhaps it is gaining new momentum. But Celestica stock's lower valuation makes…

Read more »

Data center servers IT workers
Tech Stocks

Here’s How This Canadian Company Could Profit From the Data Centre Boom

Celestica's soaring data centre demand, improving profitability, and upgraded outlook could give this Canadian tech stock more room to grow.

Read more »

Couple working on laptops at home and fist bumping
Tech Stocks

A 30-Year Retirement Is Coming: Here’s the Income Plan I Wouldn’t Delay

Retiring on $600,000 can feel safe at first, but inflation, taxes, and bad timing can quietly break the plan.

Read more »