After a dramatic bull run in recent weeks, Palantir Technologies (NYSE: PLTR) Stocks were finally giving up gains, as investors appeared to be taking profits after Friday’s blowout. That jump was fueled by Palantir’s announcement that it would list as a stock on Nasdaq and that it hoped to join the Nasdaq-100which would cause exchange-traded funds (ETFs) that track that index to buy high-flying artificial intelligence (AI) stocks.
Among those selling the shares was CEO Alex Karp, who on Friday filed to sell 4.5 million shares, which have a market value of $266 million. That sale was predetermined by a 10b5-1 plan, which sells shares at set intervals to avoid suspicions of insider trading.
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Palantir shares fell 5.38% as of 11:45 a.m. ET.
A pullback in Palantir stock seemed inevitable after it had risen more than 50% since its Nov. 4 earnings report, pushing its price-to-sales ratio above 50.
Palantir is also one of the best-performing stocks of the year, up more than 250%, and gained admission to the S&P 500 (SNPINDEX: ^GSPC)helping to drive those achievements. However, while Palantir has reported accelerated revenue growth and margin expansion this year, most of the stock’s growth has come from multiple expansion, a reflection of its improved outlook. Business Wall Street.
Palantir’s market capitalization is now approaching $150 billion and its price-to-sales ratio is 52.8. By conventional metrics, the stock appears overvalued.
That doesn’t mean Palantir doesn’t have a bright future ahead of it, but it will take some time for the business to grow to its current valuation. Investors shouldn’t expect the stock’s growing gains to continue, and a prolonged pullback at this point wouldn’t be a surprise.
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