World Stock Watch

Palantir’s Skyrocketing Valuation Sparks Concerns

Astonishing 257% Surge Year-to-Date

Palantir Technologies’ shares have experienced an extraordinary 257% increase year-to-date, driven primarily by multiple expansion. According to analysts at Jefferies, the company’s current trading multiple of 43 times its calendar year 2025 revenue is more than double that of its closest software competitor.

Unprecedented Revenue Multiple Expansion

The surge in Palantir’s near-term revenue multiple has been nothing short of remarkable, expanding by 202% year-to-date to trade at 43 times enterprise value to next twelve months (NTM) revenue. This level of expansion is reminiscent of the Covid bubble, where high-growth companies saw their multiples skyrocket simultaneously. However, in today’s more normalized macro environment, Palantir stands out with its YTD multiple expansion exceeding 4 times that of its closest infrastructure peer.

Insider Trading Activity Raises Eyebrows

Jefferies analysts have also taken notice of the increased frequency of insider selling through Rule 10b5-1 trading plans as the stock has rallied. Notably, CEO Karp has sold nearly 40 million shares, valued at over $1.9 billion, in the last three months. His current trading plan permits the sale of an additional approximately 9 million shares through May 2025, which could further impact the stock’s performance.

Underperform Rating Reiterated

Given the unsustainable multiple and increased insider selling, Jefferies analysts have reaffirmed an Underperform rating on Palantir stock, setting a price target of $28, implying a nearly 60% downside from current levels.

Changes in Shareholder Composition

The recent changes in PLTR shareholder composition, partially attributed to the stock’s inclusion in the S&P 500, have led to index funds buying shares and increasing index shareholder ownership. The company’s decision to transfer from the NYSE to the Nasdaq and its intention to join the Nasdaq 100 is seen as a move to further attract index shareholder ownership, although it is not expected to alter the shareholder mix to the same extent as the S&P 500 inclusion.