Palantir Stock Faces 37% Decline Amid Growth Concerns

Palantir Technologies' stock has dropped 37% from its all-time high, raising questions for investors. This decline beckons a deeper evaluation of whether the current dip presents a buying opportunity or signals further volatility ahead for this tech stock.

Date: 16-03-2025

AI Rating: 4

Earnings Per Share (EPS) data is not directly provided in the report but is implied through mention of adjusted EBITDA. The earnings before interest, taxes, depreciation, and amortization for Palantir is noted at $379.5 million, including stock-based compensation that adds to company equity and can dilute existing shareholders' holdings.

Revenue Growth has shown a downward trend for Palantir. The company's growth rate fell from 47% in 2020 to just 29% projected for 2024, indicating that while there is still growth, it is not as rapid as previous years. In contrast, Nvidia saw substantial growth, which adds to the competitive pressure Palantir faces.

Net Income details are not explicitly mentioned, but the analysis of EBITDA suggests a concern regarding profitability given the adjustments for stock-based compensation that inflate perceived earnings.

Profit Margins are challenged due to high stock-based compensation, impacting the company's bottom line. The analysis points out that even with an impressive percentage increase in stock since its IPO, the fundamental changes needed for long-term profitability are not evident.

Free Cash Flow (FCF) is not discussed in the report, leaving a gap in understanding the liquidity and financial health of Palantir.

Return on Equity (ROE) is also not included, making it difficult to gauge how effective the company is in generating profits from shareholders' equity.

Overall, the report raises significant concerns about Palantir's current valuation amidst decreasing growth and ongoing operational challenges, especially with government contracts accounting for a large part of its revenue. The anticipated reductions in defense spending under the new administration could exacerbate these challenges. Investors may find the current market sentiment leaning towards selling the stock due to these upcoming pressures.

Stocks: PLTR NVDA