2024 has been a historic year for the data analysis company Palantir Technologies(NYSE: PLTR). Perhaps the most important event for the company was its incorporation into the S&P 500 earlier this year, an achievement few thought was possible just four years ago, when Palantir went public and was quickly dismissed as a glorified government contracting and consulting operation with no real technological capabilities.
That narrative has come to an end. In recent years, Palantir has entered a new phase of growth thanks to the company’s successful launch of a new software package called Artificial Intelligence Platform (AIP).
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All of these factors have contributed to the notable interest in Palantir stock over the past few months. At the time of writing, Palantir shares have gained 283% so far this year. With the stock hovering around a historically high valuation, can it continue to rise?
In my opinion, I think Palantir stock will continue to rise. Below, I’ll break down the company’s latest announcement and point out why investors should keep their eyes on Palantir stock on November 26.
One thing that is often overlooked with stocks is the exchange on which they are listed. But, believe it or not, listing on the New York Stock Exchange (NYSE) versus the Nasdaq Stock Market can actually have some pretty big implications for a company.
A few days ago, Palantir announced that it will move its listing from the New York Stock Exchange to the Nasdaq. Palantir shares are expected to begin trading on the Nasdaq on November 26.
At first glance, this may seem like mundane news. But below I’m going to break down a number of examples of other companies that have moved to Nasdaq and illustrate how their stock prices moved after the transition.
Image source: Getty Images.
Below I describe two companies that have moved from their original stock exchange to the Nasdaq in recent years.
work day: On September 1, 2017, software company Workday announced that it would switch from the New York Stock Exchange to the Nasdaq. Workday shares began trading on the Nasdaq a couple of weeks later, on September 20. Here’s how Workday stock has moved since it became a traded security on the Nasdaq:
Between September 1, 2017 and September 20, 2017, the stock fell a nominal 2%.
Between September 20, 2017 and September 20, 2018, the stock gained more than 30%.
Since becoming a Nasdaq member, the stock has risen 144%.
PepsiCo: On December 8, 2017, the beverage and snack conglomerate PepsiCo announced that it would move from the New York Stock Exchange to the Nasdaq. PepsiCo began trading as a member of the Nasdaq on December 20, 2017.
Between December 8, 2017 and December 20, 2017, the stock rose a nominal 2%.
Between December 20, 2017 and December 20, 2018, the stock fell approximately 7%.
Since becoming a Nasdaq member, the stock has risen 33%.
I think the decision to move to Nasdaq benefited PepsiCo and Workday in several ways. First, the Nasdaq is often associated with technology, growth, and innovation. While PepsiCo is a consumer packaged goods empire, I think the move to the Nasdaq helped the company be perceived as more of a growth stock and less of a mundane soda and snack business.
Additionally, both Workday and PepsiCo joined the Nasdaq-100 following their respective movements on the New York Stock Exchange. Earning inclusion in the Nasdaq-100 index can help a company get on more investors’ radars. As such, increases in trading and purchasing volume may occur, positively influencing stock prices.
While the news about Palantir moving from the NYSE to the Nasdaq is interesting, you’re probably wondering why a company would do this in the first place.
To be honest, there are many reasons that could influence a company’s decision to move exchanges. Some of the more pedantic factors could be related to the fees associated with different stock exchanges, for example. In my opinion, the cost structures between the different exchanges are not really a concern for Palantir.
Rather, I think the move to Nasdaq has its roots in the brand. While the Nasdaq is home to companies from many different industries, it is typically affiliated with the technology sector. Given Palantir’s success during the AI revolution, I think the notion of the company being a consulting firm for the government has been erased.
Palantir’s close alliance with Big Tech cements the company as a strong force in the AI industry, and I believe moving to Nasdaq will help strengthen the company’s image as a legitimate player in the technology space.
I previously predicted that Palantir’s inclusion in the S&P 500 would help put the company on the radar of more institutional investors. I am now reinforcing this stance, as becoming a Nasdaq member should help better position Palantir as an attractive growth stock in a sea of leading technology companies.
Some analysts are already projecting that increased institutional buying, combined with attention from the Nasdaq, could propel Palantir into the coveted Nasdaq-100 index. If this materializes, I think it is almost certain that the company’s share price will continue to rise.
While I can’t say for sure what will happen, Palantir’s stock price has already seen some momentum following news of the company’s move from the New York Stock Exchange. I believe that listing on the Nasdaq will help Palantir become more recognized over time as a leading opportunity in the AI and technology space. For these reasons, I believe the stock will follow the trends I described above and continue to rise after its move to the Nasdaq.
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Adam Spatacco has positions at Palantir Technologies. The Motley Fool has posts and recommends Palantir Technologies and Workday. The Motley Fool has a disclosure policy.
Prediction: Palantir Stock Will Soar After November 26 was originally published by The Motley Fool
