Palantir Technologies (NYSE:PLTR) stock is up 1.44% today as of this writing, but the shares of the big data software company declined significantly since the beginning of the year, losing 29.68% to $12.98 per share. The poor year-to-date performance of PLTR stock comes after investors disengaged from growth stocks, preferring value stocks that are less exposed to rising yields.
The bearish momentum on PLTR stock might prolong in the short-term due to high market volatility and a difficult equity environment for growth stocks. However, PLTR multiplied partnerships in the past months, broadening private and public product offerings. Palantir continues to scale big data solutions, seeking to lift top-line growth that flattened in the fourth quarter (Q4) of 2021. Last week, Palantir added another partnership, engaging with Carahsoft Technology to widen government markets, which should sustain long-term sales growth.
PLTR’s Q4 2021 earnings miss of 2 cents per share disappointed investors last month. However, the stock was marginally affected, given the company lost more than 50% of its market capitalization since November 2021. Going forward, PLTR’s fundamental picture is estimated to improve. Revenues are expected to flatten to $444 million in Q1 2022 before expanding sturdily in 2022, up 29.7% year-over-year to $2 billion, providing an upside to PLTR stock.
In addition, PLTR stock is closer and closer to breaking even. Quarterly losses are expected to halve to $74.8 million in Q1 2022, compared to a deficit of $156 million in Q4 2021. The software company has a strong balance sheet and loads of cash under its hand, with a massive net cash position of $2.52 billion at the end of 2021. Despite these constructive arguments, PLTR stock is overvalued, trading at a high estimated 2022 enterprise value (EV) to EBITDA ratio of 43.6x and at 10.1x 2023e revenue.
Nevertheless, the steep stock decline witnessed since the beginning of the year is an opportunity for long-term investors looking to enter this big data leader. Market volatility might persist in the next months, bringing additional headwinds to growth stocks, such as Palantir. Yet, PLTR is growing fast and mounting data security concerns should drive up demand for its governments and military tailored-made products. The analyst consensus remains positive on the PLTR equity story, offering a median price target of $13.75 per share, representing an upside of 7%.
PLTR is a long-term opportunity and existing shareholders should consider averaging down on this big data leader before the stock price soars.
On the date of publication, Cristian Docan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.