Investment Strategist Cathie Wood Has Liquidated $97 Million in Palantir Shares. Contemplating a Sell-Off of PLTR?
Palantir Stocks: Volatility, Sky-High Multiples, and Continued Growth
Caught in the whirlwind of volatility, Palantir (PLTR) stocks have seen a roller coaster ride. With a whopping market cap of $280 billion, the tech giant's shares trade just 8% below their all-time high—a reflection of investors' uncertain sentiments regarding its towering multiples.
From May 5 to May 8, Ark Invest - the brains behind Cathie Wood - shed nearly $97 million worth of Palantir shares. Amid the sell-off, Palantir still clings onto the third-largest spot in Ark's portfolio with an investment worth more than $560 million.
First Quarter Results Unveiled
Palantir Technologies dazzled the market with its stellar first-quarter earnings, surpassing revenue expectations while meeting earnings forecasts. Surprisingly, PLTR stock plummeted over 12% on the day of the announcement.
The AI whiz kid reported revenue of $884 million in Q1, a remarkable 39% increase year-on-year, eclipsing analyst predictions of $863 million. Following the same trend, GAAP earnings per share came in at $0.08, while adjusted earnings managed to meet expectations.
Palantir's growth was fueled by its soaring U.S. operations. Revenue from commercial U.S. ventures rocketed by an astounding 71%, marking the first time it exceeded $1 billion annual run rate. In contrast, U.S. government revenue inched up by 45%, showcasing a growing adoption of Palantir's AI capabilities across defense and federal agencies.
During the earnings call, CEO Alex Karp proclaimed Palantir's strategic position at the cutting edge of AI implementation, describing the current landscape as a "tectonic shift." Meanwhile, CTO Shyam Sankar emphasized their focus on AI demand, touting their practical applications through the Artificial Intelligence Platform (AIP).
The Road Ahead for PLTR Stock
Encouraged by the impressive results, Palantir raised its full-year 2025 guidance substantially. At the midpoint estimate, the company forecasts a USD 3.895 billion LTM, a 36% increase. U.S. commercial revenue is projected to reach a staggering $1.178 billion, growing a notable 68% YoY. Palantir also revised its profitability outlook, forecasting an adjusted operating income of $1.71 billion and free cash flow of $1.7 billion.
In 2025 thus far, Palantir has been the S&P 500 Index's ($SPX) top performer, skyrocketing 53% amid broader tech sector weakness. This meteoric rise reflects investor optimism surrounding Palantir's defense contracts and its potential role in Trump's plans for government efficiency.
However, excitement around the stock has carried its market value to a staggering forward adjusted P/E multiple of 203x. Just three years prior, Palantir was trading at a much more modest forward P/E multiple of 34x.
Analysts predict Palantir stock will report an adjusted EPS of $2.04 in 2029, a considerable rise from its 2024 EPS of $0.41 per share. If PLTR stock trades at 75x forward earnings, it will fetch around $150 in early 2029—a potential growth of 25% from the current trading price of $120.
Out of the 20 analysts tracking PLTR stock, three recommend a "Strong Buy," twelve recommend "Hold," and four recommend "Strong Sell." The average target price for the tech stock is $91, indicating a potential downside of over 20% from current levels.
Given the impressive first-quarter earnings and raised 2025 guidance, Palantir Technologies has signaled its commitment to continued growth in the financial sphere of technology-driven investing. Amid this promising trajectory, the tech company is poised to explore and capitalize on the burgeoning market of artificial intelligence, fortified by its advanced AI Platform (AIP) and strategic partnerships.
