The fallout in growth stocks has been anything but a covert operation. And among those casualties is Palantir Technologies (NYSE:PLTR). But with the recent pain in mind, does PLTR stock offer better value to today’s investors?
Let’s take a look at how PLTR is shaping up, both off and on the price chart, then offer some risk-adjusted advice that’s always well-aligned with those findings.
In recent weeks a small gang of bad actors comprised of rising interest rate and inflation worries, an end to punch bowl stimulus monies and investor concern regarding the impact of Covid-19 on businesses dealt a major blow to overall market sentiment.
It’s also common knowledge growth stocks are in round two of a bearish investing cycle that began in earnest last February.
But Tuesday’s 6.50% hit in PLTR stock was particularly malicious.
The Story Behind PLTR Stock
Led by Treasury yields hitting two-year highs, shares of Palantir are now down nearly 18% in 2022 and striking 52-week lows.
Furthermore, Palantir stock has seen its valuation chopped in half since early November’s relative peak. And for those who have endured Wall Street’s entire water torture treatment, Palantir shares have lost 67% since last February’s all-time-high of $45.
Sure, there’s worse growth stock casualties out there. For example, Fastly (NYSE:FSLY), Zoom Video (NASDAQ:ZM) and DraftKings (NASDAQ:DKNG) — just to name a few — all make that case clear.
But more importantly, when it comes to PLTR stock today, the bearishness is shaping up as a more extreme buying opportunity where growth is colliding with deeper value.
With shares having been beaten up by 49.82% as of Tuesday’s “closing hell,” an in-tow multiple compression has worked to put the big data operator’s forward sales ratio at a historic low and much more reasonable 15x stock price.
Obviously, growth forecasts and sales projections like Palantir’s are never guaranteed. And given the current market sentiment, the Street is clearly convinced of its bearish behavior and skeptical of PLTR stock’s prospects.
But Wall Street, or at least traders striking the sell button, aren’t infallible. Despite today’s dizzying ability to manipulate data, sentiment and the inability to manage emotions gets the better of stocks all the time.
And it’s happening in real-time with PLTR today.
InvestorPlace’s Faisal Humayun recently made the case for buying into the data analytics outfit based on growing and solid positive cash flow, a robust intermediate-term revenue outlook as well as the quality and diversified sources of Palantir’s business.
With PLTR stock looking every bit the ugly victim of overly bearish operatives, value is most likely hidden in plain sight.
Palantir’s Weekly Price Chart
Source: Charts by TradingView
How ugly and hands-off is Palantir these days? To be fair and when looking at the illustrated monthly view of PLTR stock, technically shares have nary a leg to stand on. Classically, at least.
Over the past year and in very certain order, PLTR has broken up-channel support twice over a larger cup or saucer base, a formidable double-bottom pattern and all of the stock’s lifetime Fibonacci levels in the process.
Yup. The ugly stick is in plain sight in Palantir Technologies. And price support is now clearly missing in action.
But given PLTR’s solid growth prospects, I also strongly suspect value is likely staring investors in the face too. It’s a bull in bear’s clothing.
Still and for like-minded investors considering a purchase of PLTR stock against the going consensus, I’d suggest any covert bullish operations are better served with an actively managed collar or married put 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.
