Palantir Technologies stock closed lower for eight straight sessions through Nov. 5, falling around 22%. Only two losing streaks in its trading history have lasted longer, and both were followed by gains six months later, though 12-month results diverged widely.
Palantir Technologies stock closed lower for eight straight trading sessions through Thursday, Nov. 5. Over that span, shares dropped from $198.84 to $154.99, a fall of around 22%.
The decline left the stock about 26% under its record close on Oct. 9. By Motley Fool analyst Daniel Sparks's count of daily closes since September 2020, only two losing streaks have lasted longer: a 10-day slide ending May 10, 2021, and a nine-day slide ending March 1, 2023.
Earlier long streaks ended in gains, then diverged
After the 2021 slide, Palantir gained around 31% in the next month and was about 41% higher after six months. A year after the slide ended, however, shares were down about 60% to $7.46.
The 2023 case went the other way. Shares were up 112% after six months, and one year out the stock gained around 224% to $24.93. Sparks notes that two cases is a tiny sample, so he wouldn't rely on the streak to say much about what happens next.
Valuation is higher, growth has been faster
Valuation separates today from those episodes. Palantir's market value is more than 50 times its sales for the last four quarters, a higher sales multiple than in either earlier case, according to Sparks.
The business has changed too. Third-quarter revenue climbed 96% year over year to around $2.3 billion, and the company posted a 47% operating margin last quarter.
Not every number is accelerating, however. The total contract value of deals Palantir closed in the third quarter rose just 6% from a year before, after growth rates of 138%, 61% and 49% in the previous three quarters. Sparks writes that deal timing can make the number lumpy, but if it keeps slowing, revenue growth might eventually follow.
Shares trade near 112 times earnings
At roughly $160, the stock trades at about 112 times earnings. Sparks put his buy price at 120 times those earnings, or about $172 a share.
Palantir is a growth stock that, in Sparks's words, could easily keep swinging after its eight-session drop.
Source: The Motley Fool
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