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Why Palantir Stock Price Suddenly Crash 13% Today?

Palantir Technologies' stock price dropped 12.9% due to the Pentagon's budget cut and Alex Karp''s trading plan, but there's more.
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Why Palantir Stock Price Suddenly Crash 13% Today?

Highlights

  • Palantir Technologies stock price dropped 12.9% today, currently at $112.06.
  • The Pentagon's budget cut and Palantir Technologie's CEO's stock trading plan led to a price crash.
  • Despite the drop and concerns over valuation, analysts call it a buying opportunity.

The Palantir Technologies stock (PLTR) value took a significant hit on Wednesday, dropping 12.9% within just a few hours. Interestingly, the Palantir stock price opened at $123.86 but declined to a low of $108.56 before recovering significantly to $112.06. However, this drop was not unexpected; a series of events brought this outcome. Let’s discuss.

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Reasons Behind the Palantir Stock Price Crash Today

A Washington post is one of the most significant reasons behind the Palantir stock price drop. The report mentioned Defense Secretary Pete Hegseth’s new guidelines for an 8% annual reduction in the Pentagon’s budget over the next five years.

This reduction will significantly affect military contractors like Palantir, which generates significant revenue from U.S. government contracts. Interestingly, Palantir’s 2024 annual report discloses that its top three government clients account for 17% of its total revenue.

More importantly, these clients are under the Department of Defense, so this budget cut would significantly impact their revenue. As a result, investors feared the cut, inducing selling pressure on the PLTR stock, which caused a 13% price drop.

However, that is not all. Palantir Technologies CEO Alex Karp also had news that affected the stock price. Karp recently adopted a new stock trading plan, which allows him to sell 10 million shares in the next eight months, disturbing investors’ confidence.

Although the previous plan had even bigger sales, the revelation of this new plan around the budget cut exaggerated the market’s reaction.

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Is Palantir Stock Valuation Headed Towards Doom?

The PLTR exponential price rally in 2024 brought everyone’s attention to this stock. Over the past year, the Palantir stock price has surged nearly 380%, but concerns about its sky-high valuation have increased.

The Company’s P/E (price-to-earnings) ratio is 594.20, which shows investors’ aggressive growth expectations. However, a few stock analysts anticipate a slow to 22% year-over-year growth over the next two years, much less than the holders’ expectations. At the same time, some analysts claim that the PLTR stock is overvalued and the Pentagon’s budget cut brings its actual worth out.

Despite these claims, Palantir stock is among the top-performing stocks in the AI sector. Although Jefferies’ Brent Thill maintains its underperforming rating, some believe it could benefit from government AI investments and cost-cutting initiatives.

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What’s Next: Is This a Buying Opportunity?

Financial market experts have often regarded the downtrend as a buying opportunity. However, this is not always true. The Palantir’s historical price performance and demand make it a considerable opportunity for investors.

Analysts’ opinions are the same after considering its growth in the commercial AI business. However, investors should still monitor the stock price performance regarding government spending and changes, as PLTR stock price show signs of volatility.

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Frequently Asked Questions

Why did Palantir Technologies' stock price drop today?

Palantir Technologies' stock price dropped due to investors' concerns about an 8% annual Pentagon budget cut, which could affect the company's revenue.

What's CEO Alex Karp's new stock trading plan?

Alex Karp's new stock trading plan allows him to sell 10M shares over the next eight months.

Is PLTR stock overvalued?

Some analysts claim that PLTR stock is ‘overvalued,’ while others anticipate higher valuation due to its growth and demand.
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Pooja Khardia

Pooja Khardia is a seasoned crypto content writer with 6+ years of experience in writing, including in blockchain, cryptocurrency, DeFi, and digital finance reporting. In her adventure journey, she is currently working with CoinGape Media and leading their Trending Section. Here, she uses her expertise to deliver analytics, market insights, price predictions, and information on what’s trending in the crypto space, aiming to keep the crypto and web3 community updated with market trends and important insights. Known for a user-centric and straightforward writing style, Pooja is passionate about making crypto easy and accessible. Her writing blends market research with storytelling, helping readers stay ahead in a fast-paced industry. When not behind the keyboard, Pooja embraces her creative side through drawing and crafting. Connect with Pooja on LinkedIn or X.

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