There’s being right, well kinda sorta. And then there’s long and wrong. Or maybe not. And when it comes to Palantir Technologies (NYSE:PLTR), it’s both. What’s that mean? Let’s dive into what’s happening off and on the price chart of PLTR stock to figure that out, then offer a risk-adjusted determination aligned with those findings.
It’s been called a risky casino stock. It’s also been wagered as one of the next big things in tech.
Since debuting on the NYSE this past September, PLTR stock has had no shortage of bears and bulls. Most famously, the secretive big data operative has pitted well-watched short-seller Citron Research versus 2020’s top fund manager, Ark Invest’s Cathie Wood.
This past week and a way’s removed from a short recommendation with shares near $32, it was Citron’s $20 price target which turned into a reality.
PLTR Stock Isn’t Alone
PLTR stock’s unwind, of course, isn’t unique. In today’s increasingly less tolerant environment for higher multiple growth stories, locating a crashed stock is akin to catching fish in a barrel. It’s easy. DraftKings (NYSE:DKNG). Churchill Capital (NYSE:CCIV). Zoom Video (NASDAQ:ZM). Still, a call of $20 is $20, right? Actually, the saying “a day late and dollar short” should emphatically come to mind.
Citron’s bold short target also had a time stamp tied to the end of last year. It was specific to say the least. Moreover, PLTR stock’s low of $21.15 in the immediate short recommendation aftermath missed the price objective by just over a buck. But who’s counting, right? Hopefully, nobody. By late January shares of PLTR reached a new all-time-high of $45.
Bottom line, if the December low in Palantir was a “good enough for government work” situation for Citron to call it a profitable day, it appears we’ll never know. At least not in a timely manner. Mum has been the convenient word since late November’s short warning and front man Andrew Left busy pitching new ideas on other stocks.
Stepping Up to the Plate
On the other hand, a very transparent Ark Invest, which updates its holdings daily, has been backing up the truck. Long and wrong? Maybe, but not entirely either. On paper, Ark’s long position in Palantir, which began as a bargain-hunting venture following February’s post-earnings smackdown, has become a paper loss in no uncertain terms. Shares purchased in between $25 to $30 and further accumulation in the lower $20’s the past couple months are today valued at market price of $18.40.
But rather than throw in the towel on open losses tied to more than 20 million PLTR shares split between the Ark Innovation ETF (NYSEARCA:ARKK) and Ark Next Generation Internet ETF (NYSEARCA:ARKW), the fund manager has stepped up to the plate once again.
This week Ark has purchased more than 3 million shares surrounding yet another earnings-driven blow to the shareholder value or rather, PLTR’s price chart. Specifically and despite other Wall Street investors allowing Citron’s $20 price target to finally (kinda sorta) bear fruit with a new year-to-date low of $17.06, PLTR stock actually offered up solid earnings results.
By the numbers, Palantir reported in-line profits of 4 cents. Far from a blemish, PLTR also delivered revenue growth of 49%, which easily topped street of $332.23 million on sales of $341 million. As well and also overlooked, PLTR reaffirmed its guidance of annual revenue growth in excess of 30% through 2025. Yeah, you read that right – the next four-plus years.
Lastly and for an outfit known for it’s clandestine ways, Palantir also announced it will begin going mainstream. Well, not exactly, but nevertheless similar to JPMorgan (NYSE:JPM), Square (NYSE:SQ) and others. PLTR will begin accepting Bitcoin (CCC:BTC-USD) as payment and mulling further investment in the decentralized finance (DeFi) market.
PLTR Stock Weekly Price Chart
Source: Charts by TradingView
As the saying goes, well kinda sorta, if you liked it in the high $20’s, you have to love it in the high teens. Actually, you don’t. But Cathie does and given PLTR’s report, the interpretation is it’s time to take advantage of other investors less-enthusiastic conviction.
Entering Friday’s session, Palantir was setting up as a weekly doji decision candle that’s forming around PLTR stock’s lifetime 76% retracement level. Waiting for weekly confirmation can’t be faulted. As it stands, a buy signal above $20.30 amounts to pattern risk of 16% if a stop-loss is set beneath the doji’s low of $17.06. But I’m favoring another avenue for PLTR right now.
Given PLTR’s initial approval by investors following Tuesday’s earnings and appreciating a well-worn, risk-averse environment that’s now flirted with historical extremes in the VIX fear index, an August $22/$30 collar is a favored strategy for gaining smarter exposure, off and on the Palantir price chart.
On the date of publication, Chris Tyler and/or accounts under management, held long positions in PLTR, DKNG, ARKK and their derivatives. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is strictly intended for educational purposes only. The use of this content is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.