Why is Palantir's stock price dropping?

Palantir's stock price has dropped 16% over the past two weeks as investors cash out, concerned that the company's valuation far exceeds its actual business growth.

How does Palantir's valuation compare to other AI companies?

Palantir has a forward price-to-sales ratio of nearly 90, much higher than industry leader Nvidia's ratio of around 20, suggesting Palantir's valuation is unsustainable.

What advice does the article give for investing in Palantir?

The article suggests that investors looking to add Palantir as a long-term holding should consider a more cautious, incremental approach to building a position, given the company's high valuation.

Home / Business and Economy / Palantir Stock Plunges 16% as Investors Cash Out

Palantir Stock Plunges 16% as Investors Cash Out

25 Aug

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Summary

Palantir stock drops 16% in 2 weeks
Valuation far exceeds business growth
Investors wary of high-flying AI stocks

Palantir Stock Plunges 16% as Investors Cash Out

In the past two weeks, shares of Palantir Technologies (NASDAQ: PLTR) have plunged by 16%, continuing a downward trend that began earlier this month. The artificial intelligence (AI) software company, which helps enterprises and government agencies manage and analyze large amounts of data, has been a big winner for investors over the past year.

However, Palantir's stock has now gotten far ahead of the underlying business, and the company is caught up in a broader rotation away from AI-related stocks as their valuations have soared. While Palantir has reported strong growth, with the CEO calling the most recent quarter "phenomenal," the company's forward price-to-sales ratio of nearly 90 suggests its valuation is unsustainable.

By comparison, industry leader Nvidia has a forward P/S ratio of only around 20. Investors are now cashing in on their Palantir gains, leading to the recent plunge in the stock price. Going forward, those looking to invest in Palantir may want to consider a more cautious, incremental approach to build a position, as the company's valuation remains a concern.

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.