Sign InPalantir Technologies Inc. Shows Promising Technical Signals But Faces Profitability Challenges
Summary
Palantir Technologies Inc. (PLTR) closed at $16.32 on July 24, 2023, with a slight decrease, showing an upward trend compared to its moving averages and bullish momentum, but concerns over its negative earnings per share (EPS) and price-to-earnings (PE) ratio suggest potential profitability challenges, making it a 'Hold' rating with elements of uncertainty.
Technical Analysis
From the data, Palantir Technologies Inc. (PLTR) closed the trading day on July 24, 2023, at $16.32, showing a slight decrease of $0.11, equivalent to 0.67%. The stock price fluctuated between $16.12 and $16.69 during the day. It should be noted that the value of PLTR is significantly higher than both its 200-day moving average ($9.45) and 50-day moving average ($14.48), which suggests a general upward trend. Furthermore, the relative strength index (RSI) of 57 signifies neutrality, implying neither overbought nor oversold market conditions.
On the other hand, the positive MACD (moving average convergence divergence) of 0.52 indicates bullish momentum, which could be used to predict more potential gain in the short term.
In terms of volume, the latest recorded trading volume was 35.74 million shares, which was lower than the average trading volume of 80.21 million shares. The sizable gaps between them could hint at reduced investor interest.
Fundamental Analysis
Coming to the financial health of Palantir Technologies Inc., the company sports a market capitalization of $34.57 billion. However, the company has a negative earnings per share (EPS) of -0.12, and a negative price-to-earnings (PE) ratio of -136, suggesting it is not currently profitable.
This raises concerns over its ability to generate positive earnings for shareholders. Hence, it is recommended to keep an eye on its upcoming earnings announcement scheduled for August 7, 2023, which could potentially influence future stock performance.
Furthermore, the discounted cash flow (DCF) analysis presents the intrinsic value of the stock at $17.58, which is slightly higher than its current price. This discrepancy could convince some investors of an undervalued situation, which is typically seen as a buying opportunity.
However, the analyst consensus median target price sits at $8.00, with a high estimate of $16 and a low estimate of $4.50, which are both lower than its last closing price and DCF value. This divergence might suggest that the stock is overvalued in the eyes of market analysts.
Recent News and Developments
Browsing over the recent news about Palantir Technologies Inc., the company's AI platform has reportedly received significant recognition and is profiting from this increased interest. However, its financial success largely depends on macroeconomic factors including potential changes in the Federal Reserve's monetary stance and interest rates.
Stock Forecast and Final Evaluation
Given the various factors discussed, on the next trading day (July 25, 2023), some price fluctuation can be expected, but the stock is likely to trend around its last closing price ($16.32) considering the current technical signals. For the upcoming week, if the bullish momentum continues, the stock price could get closer to or even exceed its DCF value of $17.58.
Nevertheless, one cannot ignore the negative EPS and PE, which suggests the business is facing profitability challenges. More clarity on this should be available after their earnings announcement on August 7, 2023.
On the basis of the current information, Palantir Technologies Inc. is rated as a 'Hold.' The stock shows short-term upward momentum, indicative of potential gains. However, the company's lack of profit, potential overvaluation suggested by analysts, and upcoming earnings announcement introduce elements of uncertainty requiring careful monitoring.
