On a broadly positive session on Wall Street Friday, data analytics specialist Palantir (NYSE:PLTR) helped swing the needle forward, with shares gaining almost 5%. Earlier this week, both internal and external reports indicated that the company is making progress toward expanding its footprint. Still, PLTR stock faces risks associated with trading sentiment.
On Oct. 4, Palantir announced a significant milestone with its strategic partnership with PwC, a global professional services firm. Per the accompanying press release, the collaboration will combine Palantir’s latest capabilities regarding artificial intelligence (AI) with PwC’s wide industry experience. Subsequently, the synergy should help clients extract value via data and AI-enabled operations.
In addition, PLTR stock earlier this week jumped on a report that it could close a major U.K. data contract. Per Investor’s Business Daily, Palantir has emerged as the top choice for a large contract that involves overhauling the U.K.’s National Health Service, citing a Bloomberg report.
Notably, the five-year contract could be extended by two years, which could be worth as much as $579 million. Palantir would also help the agency analyze medical data amid the broader overhaul directive.
PLTR Stock Courts Questions Amid Ambiguous Trading
At a cursory glance, PLTR stock appears to be riding a decisive bull wave. Since the beginning of the year, it returned stakeholders over 159% of equity value, a phenomenal performance. However, since around late May to early June, PLTR has mostly traded within a sideways consolidation pattern.
Such a framework leaves Palantir in an ambiguous state. From Fintel’s options sentiment screener, the put/call open interest ratio sits below 1 for options contracts expiring between Oct. 13 and Nov. 24. This implies that more traders are acquiring calls than puts, suggesting a bullish outlook. However, this interpretation can be deceptive as major traders can write (sell) options, thus betting against prevailing retail sentiment.
Indeed, Fintel’s options flow screener implies such contrarian bets are taking place. Earlier today, major entities began selling call options at various expiration dates and strike prices, which range from $15 to $25. What makes the sold calls intriguing is that the option writers are obligated to fulfill the contract (i.e. sell PLTR) assuming option exercise. At time of writing, PLTR stock trades hands at $16.52.
Adding a wrinkle to the conversation is that Palantir shows no transactions involving insider buys, just insider sells.
Why It Matters
According to TipRanks, analysts peg PLTR stock a consensus hold. This assessment breaks down as three buys, six holds and six sells. On average, the expert price target lands at $13.88, implying 16% downside risk.
On the date of publication, Josh Enomoto 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.
