Palantir (NYSE:PLTR) made waves with its Q3 earnings earlier this month, surpassing expectations on both revenue and profit once again. Shares surged 55% in the days following the report, and overall, the stock is up 275% for 2024.
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This exuberant growth reflects the company’s success in attracting new clients and deepening relationships with existing ones. Over the past three years, Palantir has quintupled its client base while achieving net dollar retention well above 100%.
The company’s AIP platform has garnered widespread praise for its ability to enhance efficiency, boost revenue, and deliver cost savings across diverse sectors, including healthcare, food services, and railroads.
With the overall strength of PLTR appearing beyond reproach, the big question for investors is how much longer the feverish growth in share prices will continue.
One top investor, known by the pseudonym PropNotes, believes that the moment has come to take profits.
“Given the speculative frenzy around AI and the favorable rate environment, it’s time to cash out on Palantir and seek better investment opportunities elsewhere,” writes the 5-star investor, who sits in the top 2% of TipRanks’ stock experts.
Though acknowledging that PLTR will continue to “thrive,” PropNotes simply cannot get past the absurdly expensive multiple.
“With a market cap of $140 billion, Palantir trades at roughly 52x sales and 300x net income, making it unsustainably overvalued,” warns the investor. “It doesn’t matter how good the company’s organic results are, the price alone seems disqualifying.”
This is true now and into the foreseeable future. According to PropNotes, Palantir’s P/E ratio is forecasted to remain above 100x until at least 2027. PropNotes advises investors to get out while the going is good. “In the future, we don’t expect that you’ll be able to get a 50x+ sales multiple for PLTR.”
Emphasizing the time is right to “cash out,” PropNotes rates PLTR shares a Sell. (To watch PropNotes track record, click here)
While Palantir has undoubtedly dazzled investors with its stellar performance, the broader market sentiment suggests a reality check is overdue. With 3 Buy, 7 Hold, and 6 Sell recommendations, PLTR claims a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $33.73 represents a ~48% downside from current levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
