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    Factors Behind Wall Street’s Tepid Interest in Palantir

    Palantir (NYSE: PLTR) has seen a remarkable increase since the beginning of the year, yet institutional investors remain skeptical about the company’s long-term prospects.

    A key factor fueling the recent upswing in Palantir’s stock was the announcement on September 6 regarding its inclusion in the S&P 500 index.

    Throughout 2024, PLTR has experienced a largely positive trend, achieving an impressive 120.87% rise year-to-date.

    Despite this, doubts linger on Wall Street, where analysts express concerns over the company’s high valuation.

    Short-term investors may also feel uneasy, as an important technical metric, the relative strength index (RSI), has recently entered overbought territory, reaching historically elevated levels. Additionally, PLTR’s stock price has exceeded its 200-day simple moving average (SMA) by 54%.

    Furthermore, the company’s involvement in surveillance could lead to unfavorable media scrutiny, and its attempts to shift revenue sources from government contracts to commercial clients have seen mixed success.

    The average 12-month price target has been set at $27.08, suggesting a potential decline of 26.05% in the share price, based on the latest data from Finbold at the time of this writing.

    Some analysts even foresee a decline to as low as $9, which would represent a significant drop of 75.4%, although this viewpoint is considered rather isolated.

    Insider Selling of PLTR Shares

    While institutional investors currently have a negative outlook, it is equally important to monitor insider movements, especially the recent stock sales by Palantir’s CEO, Alexander Karp.

    On September 16 and 17, Karp sold 4.5 million and 4.25 million shares, totaling $316 million.

    Although such transactions are not out of the ordinary, this sale is approximately 20 times larger than any of Karp’s previous sales.

    While this is not necessarily a cause for concern—his actions may align with personal financial strategies or indicate he believes it’s a prudent time to cash in on gains—it does support the notion that PLTR’s recent growth might be capped.

    Ultimately, it is essential to acknowledge that institutions have historically exercised caution with PLTR. While these worries are grounded in real issues, contrarian investors have had many chances to achieve notable profits since early 2023.

    It’s important to note that not all perspectives on Wall Street are negative—Bank of America, projecting a price target of $50, has drawn comparisons between current forecasts and past underestimations by institutional investors regarding mobile phone adoption in the 1980s. However, making a compelling argument for PLTR—despite the lengthy timeframe—remains difficult given its current valuation.

    The long-term future of Palantir remains uncertain, and the existing circumstances do not seem to provide strong incentives for short-term or medium-term investments in the technology company.

    Image Source: Dennis Diatel / Shutterstock

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