To The Moon

Palantir’s ( $Palantir Technologies Inc.(PLTR)$ ) five-day drop to $87.84 as of Tuesday, February 25, 2025, brings it close to $85—a level it hovered around before its Q4 earnings on February 3 sparked a 24% surge. Whether it rebounds here, if this signals a valuation reset, and how to approach buying at $90 or $80, plus the CEO’s stock sale, are all worth unpacking.

Will Palantir Rebound at $85?

The $85 mark isn’t some magical support line—it’s just where the stock sat pre-earnings, reflecting a moment when the market hadn’t yet priced in Palantir’s 36% revenue jump to $828 million and its rosy 2025 guidance of $3.75 billion (crushing estimates). Now at $87, it’s testing that prior range. Sentiment on social media suggests some traders see this as a potential swing low, with $83.50-$87.50 flipping from resistance to possible demand. Technically, if it holds above $85 on decent volume, buyers might step in, betting on the AI hype and contract wins (like the $480 million DoD Maven deal) to reignite momentum. But there’s no guarantee—momentum’s faded and the Nasdaq’s wobbling. Fundamentally, Palantir’s still growing (29% in 2024, 32% projected for 2025), so a rebound could happen if the market refocuses on that over near-term noise. Probability? Call it 50/50—too many wild cards like budget cut fears and retail sentiment.

Is This a Valuation Normalization?

Palantir’s decline—from a peak near $117 last week—shaved about 25% off, dropping its trailing P/E from 600+ to around 440 (based on $0.20 TTM EPS). Forward P/E’s still a hefty 162-200, and price-to-sales is 45x. That’s not “normal” by any sane metric—software peers average 40-70 P/E, and the S&P 500’s at 29. This isn’t a normalization; it’s a breather from a 340% 2024 run fueled by AI mania and Trump-election hype. The drop reflects real risks: rumoured 8% annual Pentagon cuts under Hegseth could dent government revenue (55% of 2024’s haul), and growth, while strong, isn’t accelerating enough to justify these multiples. It’s less a reset to reality and more a tug-of-war between cultish optimism and gravity. True normalization would see it closer to $30-$50, per peer averages, but the market’s not there yet.

Buy at $90 or $80?

At $90, you’re paying a premium for hope—still 450x trailing earnings, 170x forward. It’s a gamble on AI and government spending defying the budget-cut buzz. If it dips to $80, the maths improves slightly (400x trailing, 150x forward), and you’re nearer that $85 pre-earnings base, which might attract dip-buyers. I’d lean toward $80—it’s not a bargain, but it’s less nosebleed, and the risk-reward tilts better if growth holds. Still, this assumes no major cracks in the story (e.g., contract losses). For me, neither screams “buy” yet—I’d want $50-$60 for a margin of safety, given the volatility and valuation. If you’re a believer in Palantir’s AI edge and stomach the swings, $80 could work for a small position, but dollar-cost averaging beats jumping in blind.

CEO Stock Sale View

Alex Karp’s plan to sell up to 9.975 million shares (filed February 18, worth $1.2 billion at peak prices) isn’t a shock—insiders cash out after big runs, and this was a pre-set 10b5-1 plan, not a panic dump. Palantir’s up 380% in 12 months; Karp’s just locking in gains. But optics matter—retail investors, who’ve driven this stock’s meme-like rise, see it as a red flag, especially paired with budget-cut rumours. Some traders call it a “top signal.” Fundamentally, it doesn’t change Palantir’s trajectory—Karp’s not bailing on the company (he still holds millions of shares). It’s a sentiment hit, not a death knell. Markets overreacted, but that’s par for a stock this hyped.

Bottom Line

Rebound at $85? Maybe, if buyers defend it, but it’s no sure thing. Normalization? Not quite—this is still a stretched valuation taking a breather. Buying? $80 beats $90, but I’d wait for more clarity on risks. Karp’s sale? Noise, not a nail in the coffin. Palantir’s a high-wire act—growth’s real, but the price is dreaming big. Tread carefully.

@TigerWire