Palantir Shares: Should You Purchase, Sell, or Maintain Your Investment?
Palantir Shares: Should You Purchase, Sell, or Maintain Your Investment?
Palantir Technologies' (PLTR 3.92%) stock price has experienced a significant surge recently, witnessing a rise of over 220% over the past year. Investors are excited about the company's growth in the artificial intelligence (AI) sector, with its analytical software aiding corporations and government agencies in deciphering vast sets of data.
However, the escalated stock price has resulted in numerous investors pondering if they should cash in their profits, maintain their hold, or even invest further. Let's explore a few viewpoints.
The rationalization for selling Palantir
If you're contemplating selling your Palantir shares, you ought to contemplate certain points beforehand:
- The investment rationale for the company has dramatically shifted.
- The company is being acquired, and its stock price already represents the majority of the acquisition price's value.
- You require financial resources.
- You need to adjust your portfolio.
Given that there haven't been any substantial alterations with Palantir's operations and that the thriving AI market remains in good condition, it's unlikely that your initial motives for investing have become irrelevant. Moreover, there's no compelling evidence suggesting that Palantir is a potential acquisition target.
Nevertheless, there's nothing wrong with cashing out your substantial Palantir profits today if you require funds for another purpose, like buying a new home or a significant expense. Moreover, if Palantir now constitutes an excessive portion of your overall portfolio's worth, you may want to sell some shares to balance it out.
The case for preserving Palantir
If you currently own Palantir stock, you're likely trying to deduce whether the stock still has room to escalate. Although there's no definitive answer, the company's impressive growth trajectory serves as an indicator of its continuing ascent.
Palantir's earnings increased by 30% in the third quarter, reaching $726 million, surpassing analysts' consensus estimate of $701 million. Moreover, the company's adjusted earnings per share (EPS) grew by 43% from the previous year's quarter to $0.10, also surpassing analysts' consensus estimate of $0.09.
The company further expanded its customer base by an astounding 39% and closed 104 deals worth $1 million or more.
In essence, Palantir's business performance is robust, and there's no fundamental modification within the company that should prompt investors to reconsider their investment. In summary, maintaining your Palantir shares may be a sound strategy at this juncture.
Divergences for acquiring Palantir
To be forthright, I believe that the argument for purchasing Palantir right now is fairly anemic. This is not due to the company being unworthy but because its stock is excessively expensive.
As of now, the shares possess a price-to-earnings ratio (P/E) of 328. This is an extraordinary P/E ratio, even for a growth stock within the technology sector. For comparison, the overall technology sector's P/E ratio currently stands at around 33.
If there's a decline in the company's share price, it might create a procurement opportunity for investors. However, as it stands, Palantir's stock is priced far too exorbitantly to purchase.
Conclusion
In conclusion, if you own Palantir's stock, it's advisable to hold onto your shares unless you require immediate financial resources or desire to balance your portfolio.
Moreover, even if you aspire to buy Palantir's stock, it's likely best to refrain from doing so today, considering its inflated valuation. Despite Palantir offering a remarkable opportunity in the AI realm, it's priced for perfection.
If you're considering investing in Palantir, you might want to reconsider due to its high price-to-earnings ratio, making it an expensive buy even for a growth stock in the technology sector. On the other hand, if you already have Palantir shares and are debating whether to sell, you might want to consider maintaining them given the company's strong earnings growth and expanding customer base, as well as the robust performance of the AI market.