Shares of AI software company Palantir (PLTR) dropped over 6% at the time of writing after ARK Invest, led by Cathie Wood, sold $15 million worth of shares across its ETFs. A post from Ark Invest Daily revealed that the firm offloaded 196,728 shares on January 6, which reduced Palantir’s weighting in the ARK Fintech Innovation ETF (ARKF) to 4.2%. This follows several sizable sell-offs by ARK ETFs in November and December.
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Despite a massive 330% surge in 2024, Palantir’s momentum has slowed in early 2025. Indeed, Morgan Stanley started coverage with an Underweight rating and set a $60 price target. Additionally, the stock’s steep forward price-to-earnings of 200x and forward price-to-sales ratio of 62x are well above sector averages of 26x and 3.3x, respectively. It is also worth noting that Palantir’s heavy reliance on government contracts could pose revenue risks.
However, there are potential tailwinds for Palantir, including strong U.S. government contract momentum, its recent inclusion in the Nasdaq 100 index (NDX), and political connections. In fact, co-founder Peter Thiel’s ties to Vice President-elect J.D. Vance could prove beneficial under the incoming Trump administration.
Is Palantir a Buy, Sell, or Hold?
Overall, analysts have a Hold consensus rating on PLTR stock based on two Buys, eight Holds, and six Sells assigned in the past three months, as indicated by the graphic below. In addition, the average PLTR price target of $44.85 per share implies 36.8% downside risk.