In recent weeks a couple of bad actors have roughed up Palantir (NYSE:PLTR) shares. But given the recent pain in PLTR stock, has a hidden buy opportunity opened up? Let’s take a closer look.
The past month has been a tough one for PLTR investors with the stock off by nearly 30% and just removed from challenging its lowest stock price levels since May.
Moreover, it’s enough to have put Palantir shares underwater by about 16% in 2021. So what gives?
There is of course today’s broader inflation and Covid fears, which have hung over PLTR stock. But that’s not all.
A Deeper Look At PLTR Stock
The bearish macro narrative has found the diversified and well-entrenched government big data analytics outfit in good-but-miserable company with higher multiple, large-cap growth stories.
From Shopify (NYSE:SHOP) to Lucid Motors (NASDAQ:LCID) or Square (NYSE:SQ), there’s plenty of similar and challenged investment propositions of late.
But unique to Palantir Technologies plight is that the “water torture” treatment began with a rough interrogation by investors focused on the mixed Q3 results announced on Nov. 9.
In brief, the software-as-a-service (SaaS) provider matched Street views in delivering its first ever quarterly profit of 4 cents; it added more customers than forecast and provided a 35% sales beat on the back of its expansion into healthcare, energy and manufacturing markets.
Palantir also offered an upbeat fourth-quarter sales outlook of $418 million compared to analyst views of $402 million.
Management was also very upbeat about its newly released Foundry software for the digital cryptocurrency market, which it sees as a “massive accelerant for crypto companies.”
Yet PLTR shares were immediately beaten up by more than 16% in the two days following the release.
The consensus takeaway is investors couldn’t look past a weaker-than-expected deceleration in Palantir’s bread-and-butter government business and weaker margin outlook of 22% for Q4. (That’s down from Q3’s 30%).
Public sector growth was cut nearly in half from the second quarter. And with that deal value up just 7% and direct benefits from Covid-related spending largely in the rearview mirror, as some other notorious deal makers have said, “it is, what it is.”
PLTR’s Weekly Price Chart
Source: Charts by TradingView
There’s no doubt it has been ugly in PLTR stock.
Not only has the past month led to a fairly stiff unwind in relative and absolute performance, but shares completely failed a strong-looking saucer-shaped base and bullish up channel pattern.
That’s not how everyone sees it of course. But that’s exactly what it looked like on the well-illustrated price chart used to guide PLTR stock positions through earnings.
It’s what makes a market, right?
The Bottom Line on Palantir
Today, a larger saucer basing pattern — or what some might label a double bottom — could be developing relative to PLTR’s May low.
And with Palantir Technologies’ weekly stochastics just now crossing bullishly in oversold territory, there are reasons to be positive about the big picture in PLTR stock moving into 2022.
Again and always, a stealthier bearish operation could be at work too.
Ultimately, regardless of where you find your information in reaching an investment decision, a purchase in PLTR stock always looks better using a collar strategy.
On the date of publication, Chris Tyler holds long (either directly or indirectly) positions in Palantir Technologies (PLTR) stock and its 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. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
