Palantir: A Valuation Puzzle

Palantir Technologies (PLTR 1.89%). It’s a name that sounds suspiciously like something out of a spy novel, and in a way, it is. They deal in data, in unearthing patterns, in making sense of the frankly bewildering quantities of information that wash over us daily. But the stock, alas, isn’t currently behaving like a stealthy operative. It’s been…underperforming. As of Monday, it had retreated around 20%. Now, the market as a whole hasn’t been exactly throwing parties – the S&P 500 is up a modest 2% – but Palantir is lagging, and that’s causing a bit of head-scratching. You see, they keep posting perfectly respectable numbers, and yet the share price seems determined to go its own way.

It’s a curious thing, isn’t it? We’re all told to invest for the long term, to focus on fundamentals, but sometimes the market seems to operate on a different set of rules altogether. It’s a bit like trying to predict the weather – you can have all the data in the world, but a rogue gust of wind can still ruin your picnic.

Valuation: A Bit Like Trying to Count Stars

Palantir’s latest earnings report was, by all accounts, solid. Another beat on both earnings and revenue, optimistic guidance…the usual good stuff. CEO Alex Karp, a character who appears to relish hyperbole, declared these the “indisputably the best results…in tech in the last decade.” A bold claim, certainly. But here’s the rub: investors seem to have already priced in all this goodness. The stock trades at a valuation of 216 times trailing earnings. That’s…substantial. It’s like paying for a lifetime supply of tea based on the expectation of a really good cuppa.

At that price, investors aren’t just expecting good results; they’re expecting miracles. And miracles, as a general rule, are difficult to deliver consistently. It’s a precarious position, really. A company can consistently exceed expectations and still disappoint if those expectations are already sky-high.

Risk Appetite: A Flight to Safety

Now, Palantir isn’t exactly a risky business. They turn a profit, they’re growing, and they seem to have a reasonably solid business model. But the stock itself carries a degree of risk, simply because of that lofty valuation. And what we’ve seen this year is a definite shift in investor sentiment. People are getting a bit nervous. It’s a bit like being on a ship in choppy waters – you tend to gravitate towards the railings.

Bitcoin, that famously volatile cryptocurrency, is down around 20%. Meanwhile, gold and silver are hitting record highs. And, rather surprisingly, dividend stocks are outperforming. The iShares Core High Dividend ETF is up 13%. It seems investors are increasingly drawn to the comforting predictability of a regular income stream, rather than the potential for explosive growth. Which, as a dividend hunter, I find entirely sensible. A bird in the hand, as they say, is worth two in the bush. Especially if the bush is located on a rather unstable cliff.

Palantir may be a fundamentally sound company, but that doesn’t guarantee its stock will keep climbing. It’s expensive, and in a market that’s increasingly prioritizing safety, that’s a significant headwind. I wouldn’t be surprised to see it fall further, frankly. It’s a fascinating company, but sometimes, even the most impressive technology can’t overcome the simple laws of financial gravity.

2026-02-10 20:04

Valuation: A Bit Like Trying to Count Stars

Risk Appetite: A Flight to Safety

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