🚨 WARNING: How Low Can Palantir Stock Go?

Palantir Technologies (NYSE: PLTR) just delivered another round of strong earnings—and yet, the stock is selling off hard. So what gives? Despite beating Wall Street expectations and raising forward guidance, investors are hitting the brakes. The culprit: valuation fears.

🔍 A Closer Look at the Numbers

Palantir reported first-quarter 2025 revenue of $884 million, up 39% year over year. Adjusted earnings per share came in at $0.13, beating analyst forecasts. Even better, the company raised its full-year revenue guidance to between $3.89 billion and $3.902 billion, outpacing most estimates.

These numbers would usually be enough to send a stock soaring—but not this time.

📉 Why Is the Stock Dropping?

After the earnings announcement, Palantir stock plunged more than 13%, closing around $108. The dramatic sell-off wasn’t about missed expectations—it was about valuation.

Palantir's stock is currently trading at eye-popping valuation multiples:

• P/E ratio: 561x

• Forward P/E: 148x

• Price-to-sales: Far above peers in the software and AI space

Investors are questioning whether even robust revenue growth can justify such steep prices. At these levels, the market is pricing in near-flawless execution and exponential growth—any misstep could trigger a deeper correction.

🏛️ Over-Reliance on Government Contracts

Another concern: Palantir still leans heavily on government contracts, especially in defense and intelligence. While these deals are often large and sticky, they’re not without risk—especially with looming uncertainties around government budgets and policy shifts.

Diversifying into commercial sectors is part of Palantir’s long-term plan, but it’s not yet enough to silence the skeptics.

⚖️ Analysts Are Split

Wall Street is torn. Some analysts view the dip as a buying opportunity. Wedbush raised its price target to $140, citing long-term AI and software potential. Others, like Jefferies, remain bearish, calling the stock overvalued with a target near $60.

🚦 So, How Low Can It Go?

If the market continues to rotate out of high-valuation tech stocks, Palantir could face more downside pressure. A move back toward a more reasonable valuation—say, a forward P/E closer to 50x—could imply a price in the $60–$70 range.

Of course, if Palantir continues to execute at this level, it might grow into its valuation over time. But right now, the market isn’t in the mood to pay top dollar for “future potential”—it wants profitability and fair value.

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Bottom Line:
Palantir’s fundamentals are strong, but its stock may be too far ahead of itself. If you're an investor, keep a close eye on valuation metrics and market sentiment. The stock could recover quickly—but only if investors regain confidence that its growth is worth the premium price.