Some have called Palantir Technologies (NYSE:PLTR) a risky bet. But with Wall Street spies wagering heavily on PLTR stock to extend its winning streak, is it time for bullish investors to follow suit? Let’s take a look at what’s happening in PLTR stock today, then offer a risk-adjusted determination aligned with those findings.
Wednesday was appropriately called “Demo Day,” but with the benefit of hindsight, it’s not what you usually think of for that type of event.
Instead, a broad-based sell-off on Jan. 27 triggered by the Fed did take a wrecking ball to many stocks. That demolition in value is true. Amazon (NASDAQ:AMZN). Humana (NYSE:HUM). Bank of America (NYSE:BAC) or Regeneron (NASDAQ:REGN) to name a few, are diversified testaments to that fact. But Demo Day was something entirely different in shares of PLTR.
For recent direct listing and clandestine big data operative Palantir Technologies, Wednesday’s Demo Day was a planned corporate tell-all event. And by the afternoon’s closing bell, figuratively and literally, it razed the battleground stock’s bearish operatives as PLTR jumped more than 10% to the shares’ record highs.
So, what was Demo Day all about anyways? In a nutshell the event was chance for Palantir to show off its “sticky and alpha-generating” Foundry, Gotham, and Apollo SaaS platforms. And while it doesn’t read like a Jason Bourne novel, some very well-qualified analysis from John Rhodes on Seeking Alpha that explores PLTR’s critical defensive and offensive business deployments, is worth a look. It may even put some bullish investors on the edge of their seats.
Ignore Bears Griping That PLTR Stock is ‘Expensive’
Looking past Wednesday’s action, bears are likely to gripe PLTR is expensive, though yesterday shaved the price by almost 9%. But the naysayers have been warning against Palantir since the get-go this past fall when the stock traded on either side of $10. Vocal short-seller Citron Research even famously called PLTR stock a casino at the end of November when shares zigged and zagged around $30.
Still, and to be nonpartisan, nails chewed to their cuticles over today’s lofty 62x sales multiple by bullish believers in the Palantir story probably aren’t going away anytime soon. And mind you, that’s even if PLTR comes out and literally saves the world when it reports earnings in a couple weeks. It will still look pricey.
In our estimation PLTR seems like the real deal. But it’s fundamentally flawed according to the bears. Until it’s not, right? That could be the path for Palantir in the months and years ahead. But let’s face it, finding the next Netflix (NASDAQ:NFLX) or Tesla (NASDAQ:TSLA) during a lengthy battleground phase is no easy task. And holding the few stocks that do rise to challenge and enjoy a storied rally, is equally challenging.
PLTR Stock Daily Price Chart
Source: Charts by TradingView
What can appreciatively be said is that Palantir has a lot going for it. Right now. the company’s SaaS software puts it in an advantaged position. What’s also shaping up today is PLTR stock’s price chart.
Technically, investors are being offered the opportunity to buy PLTR stock on weakness into zone support. This area consists of Fibonacci, prior highs, and an emerging uptrend. It’s a volatile region spanning roughly $27 – $33.50. As much, it’s not for the faint of heart or those trying to use a cookie cutter stop of 7% to 8%. But, with heavy institutional-style buying this past week as shares broke out, the chance for more-determined sponsorship. That, along with new highs in 2021, trumps our volatility concerns.
Bottom-line, pick your side or remain on the sidelines. But if investors wish to position with Palantir as a core holding with sights set on huge upside, but also want greater authority to do the right thing during those inevitable harder-hitting corrections, a PLTR stock collar is the favored weapon of deployment.
On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.