Palantir Technologies Inc. (NASDAQ: PLTR) shares have been on the rise recently. The data analytics firm’s stock broke out, suggesting a potential rally.
Palantir had a classic ‘buy the rumor, sell the news’ scenario after a strong earnings report. The stock sold off at first even though the company beat estimates. This happened because traders had already expected the strong report and bought shares beforehand.
With no new buyers, the stock went down for a short time. But the recent price action shows that Palantir has now broken through its previous resistance level. Resistance is a price where a lot of sell orders usually stop the stock from going higher.
When a stock breaks through resistance, it means the sellers who made that resistance have left the market. This could set the stage for the stock to keep going up as buyers have to outbid each other to get shares. Earlier this month, Palantir hit resistance at $124.00 and had a brief sell-off.
But now the stock seems to have gotten past that barrier. This is a bullish sign. It suggests the stock is ready to keep moving higher as buyers get more aggressive.
The way Palantir’s price moved after earnings shows how complex market forces can be. As traders and investors take in this information, it could lead to a strong upward trend for the company’s shares. Palantir recently reported another strong quarter.
Its growth sped up, and it beat what analysts expected for revenue. It met expectations for profit. But the stock isn’t soaring to new heights.
Instead, it fell in the days after the earnings release. Year to date, Palantir’s share price is up more than 71%. But recent trading suggests the market is having second thoughts about the stock.
Last week, Palantir reported record quarterly sales of $884 million for the first quarter of 2025.
Palantir breaks resistance level
CEO Alex Karp says the business is “in the middle of a tectonic shift in the adoption of our software.” Sales grew an impressive 39% compared to the same quarter last year.
But the company barely beat Wall Street’s revenue expectations of $863 million. Its adjusted earnings per share of $0.13 just met expectations. The company showed a lot of growth — the fastest pace since 2021.
But the stock price reaction was mostly because the market’s expectations had gotten very high. This led Palantir shares to fall after the news. The reason for the disappointing stock performance is its high valuation and huge expectations.
Earlier this year, Palantir’s stock crashed a bit as investors worried about tariffs and a possible recession. While stocks have mostly recovered as tariff tensions eased, that panic may have made some investors more cautious. This is especially true for a very expensive stock like Palantir.
Palantir’s price-to-earnings ratio of 512 has some analysts calling it a meme stock despite its growth and steady profits. Palantir’s business itself isn’t risky. The danger is in its valuation — the stock’s value compared to its earnings is massive.
Its P/E has been at or above 200 since October 2024. With Palantir, investors have regularly paid a huge premium for the business. With some investors possibly spooked, this may have caused more hesitation lately.
Palantir didn’t deliver blowout earnings numbers like it has in the past. The results were good but maybe not amazing enough to convince investors that the company can’t be stopped. Palantir’s business looks strong.
But at nearly $280 billion in market cap, it is valued much higher than many other, more established businesses. Paying for future growth is one thing. But paying 500 times earnings is quite another.
Palantir’s valuation has been out of whack for a while. It may be overdue for a reality check. Investors should be careful with this highly speculative stock.
Its fundamentals simply don’t support such an extreme valuation.