Palantir’s Soaring Share Price: What’s Next for Investors?
A Skyrocketing Stock
Palantir’s share price has experienced a remarkable surge, jumping over 220% in the past 12 months. This significant growth has left many investors wondering whether to sell, hold, or buy shares. As the company continues to thrive in the artificial intelligence (AI) market, its analytics software helping companies and government agencies make sense of their vast data quantities, investors are eager to make informed decisions.
To Sell or Not to Sell
Before considering selling your Palantir stock, ask yourself a few crucial questions. Has the investment thesis for the company changed? Is the company being acquired, with its share price already reflecting the bid price? Do you need the money for another purpose? Does your portfolio require rebalancing? If none of these scenarios apply, it’s unlikely your initial reasons for buying the stock have ceased to apply.
Holding Steady
If you already own Palantir, you’re likely trying to decide whether the stock has more room to grow. The company’s impressive revenue growth of 30% in the third quarter, beating Wall Street’s consensus estimate, suggests it’s on the right track. Additionally, Palantir’s adjusted earnings per share (EPS) grew 43% from the year-ago quarter, and the company closed 104 deals worth $1 million or more. Its business is thriving, and nothing fundamentally changed to give investors pause.
The Case Against Buying
While Palantir is a good company, its stock is currently overvalued, with a price-to-earnings ratio of 328. This staggering P/E ratio, even for a growth stock in the technology sector, makes it a pricey investment. If there’s a pullback in the company’s share price, it might create a buying opportunity. However, as it stands, Palantir’s stock is too expensive to buy.
The Bottom Line
If you own Palantir’s stock, holding onto your shares is likely a good strategy unless you need the money for something else or want to rebalance your portfolio. However, if you’re considering buying Palantir’s stock, it’s probably best to wait until its valuation becomes more reasonable. The company offers an impressive opportunity in the AI space, but it’s priced for perfection.
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