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Don’t Chase the Next Palantir Stock Bounce Back

InvestorPlace2021-05-13

Still richly priced, once-hot PLTR stock may see another short-term bounce, before pulling back.

Palantir(NYSE:PLTR) stock may be starting to get out of its slump. Since February, the big data play, andRedditfavorite, has slid significantly from its highs. But,thanks to a strong earnings report, and a possible investment of company funds intoBitcoin(CCC:BTC-USD), shares have bounced back, after briefly falling below the $20 per share mark.

In the near-term, this could continue. Shorts who bet against the stock at higher prices may be looking to cover their positions.

Those who missed out on the stock’s first epic rally may be tempted to jump in before it possibly takes off again.

But while we may see an additional near-term boost, don’t count on a continued rebound back to $30 per share, much less its $45 per share all-time highs. Why? Sure, with its impressive sales growth in the preceding quarter, for now this remains a growth story. But with this growth more than reflected in its valuation, Palantir continues to trade at prices that overestimate its long-term potential.

Worse yet is the specter of growth stocks like this correcting, an uncertainty that looms over the markets. As this continues to play a bigger role in price action, shares have already slid back below $20 per share asthe market has absorbedthe recent positive company-specific news.

PLTR Stock: Despite Strong Results, The Story Hasn’t Changed Much

How solid were this company’s recent results? After posting 49% revenue growth and topping estimates, the company now has something to counter the pessimism that’s been weighing down the stock since February. Along with earnings, the company also released guidance for the current quarter.

Again, these numbers came in ahead of analyst consensus. The results and guidance are certainly a positive for PLTR stock.

But it’s important not to get too excited about this news. By and large, the story hasn’t changed much for Palantir. Growth this year and the next may remain strong. Analysts numbers point to34.1% revenue growth this year, and 30.7% revenue growth in 2022. But it’s questionable if it’ll continue to the extent still being priced into shares.

As I discussed in my last article on the stock, we may see itsgovernmental business stall out sooner than expected. It’s possible growth in the commercial sector has been used to bolster the case that it can remain in “growth mode” much longer than the bears anticipate.

But, again, it’s uncertain this will be the case either. Even if it does continue its high levels of growth, that’s far from a guarantee of solid stock price performance going forward.

With growth stocks at risk of correcting further, the temporary pop we’ve seen in this stock in recent days could revert back to its prior downwards trajectory.

Palantir’s Still Vulnerable if Growth Stocks Continue to Correct

At today’s prices, PLTR stock trades for a forward price-to-earnings (P/E) ratio of 144.9x, and a price-to-sales (P/S) ratio of 18.1x. For the past year, investors have accepted the new normal of growth stories commanding such premium valuations. A near-zero interest rate environment has helped to keep this going. But even after the pullback in growth stocks since February, more declines may be just around the corner.

Treasury Secretary Janet Yellen has walked back comments aboutpossible interest rate increases. But it was enough to start giving the markets a scare. This is clear from the performance of growth-oriented indices like theNASDAQ 100— as measure by theInvesco QQQ Trust(NASDAQ:QQQ) — since the start of May.

With concerns about inflation and an overheated economy, investors have good reason to anticipate rising rates. Not only that, as former New York Federal Reserve President Bill Dudley discussed in a recent piece published byBloomberg, marketscould be in for an interest rate surprise.

If this pans out, stocks like Palantir, trading for triple-digit forward P/E ratios thanks to their high growth projections, may see a significant contraction.

And even if its high growth continues, shares could get stuck in neutral once they find a floor post-correction, similar to the “lost decade” of poor stock price performance experienced by big tech names likeMicrosoft(NASDAQ:MSFT) in the decade following the “Dotcom Bubble.”

Bottom Line: Don’t Chase The Bounce Back

Cathie Wood’sARK Investmay be holding Palantir shares with diamond hands andadding to its position. But the risk of it getting sunk by a possible growth stock correction outweighs the chances that it continues to bounce back (even partially).

Depending on how things play out, growth stocks like this could be in for an additional correction. And even once it bottoms out, it could be years before it starts delivering strong returns for investors once again. So what’s the best move now with PLTR stock? Steer clear.

On the date of publication, Thomas Niel held a long position in Bitcoin. He did not hold(either directly or indirectly) any other positions in the securities mentioned in this article.

免责声明:本文观点仅代表作者个人观点,不构成本平台的投资建议,本平台不对文章信息准确性、完整性和及时性做出任何保证,亦不对因使用或信赖文章信息引发的任何损失承担责任。

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  • 5c5d2db5
    ·2021-05-14
    Nice enter price 
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  • keaty
    ·2021-05-14
    Is it good enough price to enter?
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  • Benstonk
    ·2021-05-14
    Buy only
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  • ASH21
    ·2021-05-13
    Nice
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    收起
    • MrHappy
      meh
      2021-05-15
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    • ASH21
      ya
      2021-05-17
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  • Stanwin
    ·2021-05-13
    Hi
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  • Irene104
    ·2021-05-13
    Nice information. Pls like & comment. Thanks 
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    • ASH21
      ok
      2021-05-13
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  • capsulefong
    ·2021-05-13
    Like and comment pls 
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    • Irene104
      Done. Pls like & comment back. Thanks
      2021-05-13
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  • Xav
    ·2021-05-13
    Ok
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  • janiceyl
    ·2021-05-13
    Bad news
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  • Marcus1993
    ·2021-05-13
    Wow
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    • dpgg94
      wow
      2021-06-11
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  • Hrms
    ·2021-05-13
    Oh
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  • Zx1995
    ·2021-05-13
    Sadz
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    • Hrms
      Sad
      2021-05-13
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  • uttermehhnes
    ·2021-05-13
    I’m going to continue holding and averaging down. Don’t want to miss these low prices just because I’m trying to time the market 
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    • Bustylibra
      Same here
      2021-05-13
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    • Cfgramos
      True
      2021-05-13
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  • Holla
    ·2021-05-13
    Like my comment pls
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    • McGreedy
      comment pls
      2021-05-13
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    • Huathk
      K
      2021-05-13
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    • EdInvesting
      Comment back here pls
      2021-05-13
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  • weifeng_86
    ·2021-05-13
    Wait and see
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    • Holla
      Like my comment pls
      2021-05-13
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    • weifeng_86
      ok
      2021-05-13
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    • Zx1995
      Ooo
      2021-05-13
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  • ALi_BaBa
    ·2021-05-13
    Great
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    • ALi_BaBa
      Great
      2021-05-13
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  • BigRobin
    ·2021-05-13
    😂
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    • weifeng_86
      nice
      2021-05-13
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    • BigRobin
      🤨
      2021-05-14
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    • BigRobin
      🤪
      2021-05-15
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