Palantir (NYSE:PLTR) stock has fallen by about 13% during the past five trading days on two pieces of news. The first bit of news is that investor Sompo Holdings sold part of its stake in the big data analytics company, booking a gain of 86 billion yen (JPY), or about $584.2 million. The exact amount of the sale was not disclosed, although SMBC Nikko analyst Masao Muraki believes that the Japanese company sold about half of its prior stake. Sompo operates as a insurance services company and is one of the top insurers in Japan.
In a statement filed yesterday, Sompo disclosed that it had sold part of an investment in its portfolio:
“The Company has sold a part of investment securities for the purpose of appropriate risk control from the perspective of balance sheet management and to improve capital efficiency through the effective use of assets, aiming to further enhance its corporate value.”
PLTR Stock: Sompo Holdings Sells Shares
Palantir and Sompo have a long history. The two companies launched a joint venture in 2019 to provide services to the Japanese government and commercial clients. In 2020, Sompo invested $500 million into the company before its initial public offering (IPO).
In February, the two companies also signed a $50 million five-year expansion agreement. Palantir said in a press release about the agreement:
“This expansion will enable the roll out of critical workflows across 10,000+ salespeople within SOMPO Japan, further developments of SOMPO’s Real Data Platform (“RDP”), and many other critical growth opportunities across SOMPO Holdings.”
With shares of PLTR stock up by about 170% so far this year, Sompo’s sale seems to capitalize on a year of outperformance.
Meanwhile, the other news sending PLTR lower is a comment from William Blair analyst Louie DiPalma. Following comments concerning the increased use of open source vendors at an industry event, DiPalma believes that Palantir’s contract with the U.S. Army is at risk of a price reduction. In December 2019, Palantir signed a four-year $458 million contract with the U.S. Army. That contract is set to expire very soon.
The analyst ultimately believes that the U.S. Army will source Palantir’s work from other vendors. That could result in a contract price reduction renewal that is less than the $116 million annual run rate that Palantir is currently receiving.
On the date of publication, Eddie Pan did not hold (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.
