(Investor’s Business Daily)
Shares in Palantir Technologies (PLTR) fell for the fourth straight trading session as investors took profits and a key Wall Street broker said the company’s recent earnings didn’t support a rally in the stock. Palantir stock plunged by double digits Wednesday.
Morgan Stanley analyst Keith Weiss downgraded Palantir stock, a recent initial public offering, to underweight following its big run-up.
He said investors have been debating whether Palantir should be valued as an enterprise software maker or a “less desirable” consulting firm.
In addition, Weiss said Palantir’s rally following its earnings report in early November was not grounded in fundamentals.
“We believe much of the incremental move since Q3 results are likely related to factors outside fundamentals, including strong retail long-interest squeezing strong institutional short interest,” Weiss said. He added: “This leaves the stock now trading at a significant premium to software peers.”
Palantir stock fell 11.7% to 22.66 in midday action on the stock market today.
Palantir sells data analytics software primarily to U.S. government agencies, though its commercial business has gained traction. The software maker aims to expand into health care, energy, and manufacturing sectors.
Palantir stock launched a direct listing on Sept. 30 priced at 7.25 a share. In a traditional IPO, companies create new shares, underwrite them and sell them to the public. A direct listing creates no new shares and sells only existing, outstanding shares with no underwriters involved.
Weiss said investors should be cautious because a lock-up agreement on insiders selling Palantir stock expires in mid-February. He says 1.8 million more shares will be available to trade.
In addition, Palantir stock went on to form an IPO base with an entry point of 11.52. Further, Palantir hit an all-time high of 33.50 in intraday trading on Nov. 27.