Palantir Technologies stock had a great 2024, but the new year is starting off rocky for the software company.
Palantir stock fell 7.8% to $69.99 and was the worst performer in the S&P 500 on Tuesday as the index dropped 1.1%. This was the stock's largest percentage decrease since May 7, 2024, according to Dow Jones Market Data -- a notable move for the stock that had a stand out year in 2024.
Shares of the artificial intelligence-software company soared 340% in 2024. The stock was the best performer in the S&P 500 last year. Investors have been betting big on hopes that companies will continue to spend massive amounts of money on AI software, which was a major theme at the end of last year.
But pessimism seems to have crept in this year. According to a trade notification email from ARK Investment Management from Monday night, the ARK Innovation ETF, the ARK Next Generation Internet ETF, and the ARK Fintech Innovation ETF unloaded a combined 196,728 shares of Palantir.
On top of the sale from Wood's funds, Morgan Stanley analyst Sanjit Singh assumed coverage of Palantir with an Underweight rating and $60 price target on Monday.
"While acknowledging strong execution and momentum, we see success more than priced in at the current multiple premium," Singh wrote in a research note. Shares of Palantir are currently trading at 160.4 times earnings expected over the next 12 months.
Some analysts are optimistic, though. Wedbush's Dan Ives rates Palantir as Outperform with a $75 price target. He wrote in a research note Jan. 2 that with AI spending expected to grow significantly within IT budgets in 2025, he believes the company is in a "prime spot to continue expanding its pipeline/deal flow while providing more use cases coming forward to address critical problems across industries and empower data-driven decision-making."
Shares of Palantir have dropped 12% over the last two days, their worst two-day stretch since the two days ending May 8, 2024.