Sticking With This Palantir Price Target After Insider Sale Filing Raises Alarm

As one might have expected, over the past couple of years, the last year especially, my email has been filled with mostly positivity. 

As a financial talking head who used to routinely appear at CNBC, Fox Business, Fox News, Bloomberg TV, Bloomberg Radio, CNN, Yahoo Finance, the TD Ameritrade (now Charles Schwab) Network and more foreign financial news outlets than I could possibly remember, I have said a lot and made a lot of calls where, unlike many of my colleagues, I had skin in the game.

I have received a ton of email and even a good bit of snail mail, with content ranging from friendly "thank you" notes to overt death threats that were actually placed in my family's mailbox with cut-out letters pasted on looseleaf. That was fun. 

Though I have always tried to remain non-public politically, I was asked on live cable TV for my opinion as an economist on President Trump's proposed tariffs in regard to China (during his first term). I backed the president's plan on TV... and the death threats poured in. Yes, people are that crazy.

Not the people who talk about and ask about stocks, though. They can sometimes be angry. Often, they are friendly (see the above mentioned "thank you" notes). Sometimes, these readers are constructive, requesting I take a look at stocks I might not have otherwise and sometimes they are nervous.

On Wednesday night, these emails turned nervous for the first time in a while. Yes, I have become known as Wall Street's Palantir Technologies PLTR guy as I made the bull call (with a $6 handle) probably well before everyone not working for the firm. I told my readers at TheStreet Pro and its predecessors, and I told Liz Claman's viewers at Fox Business time and time again, that this stock was different. I was buying it for future generations of Guilfoyles.

I still feel that way about Palantir. But that does not mean that I am a bump on a log and will take a punch in the nose without trying to trade around the core or bulk of my long position with a smaller portion of said position in order to soften the blow when something like this Wednesday beat-down happens. Let's continue.

Body Surfing

The shares of Palantir Technologies were ripe for some profit taking. Most of those long these shares were looking at not just three- or four-figure percentage point gains since entry, but something like 45% gains just year to date. That also means that many of those long PLTR were working with much lower net bases (plural of basis), making it tough psychologically for non-professional investors to add up here on weakness.

In addition, less than 3.5% of the entire float was held in short positions coming in, so there would be no massed cavalry charge from that group. Hence, the "ugly stick" made an appearance, and the stock gave back 10.1% on Wednesday and some more overnight. Overnight, after I had sold a small portion of stock with a $111 handle on the way down, I then repurchased those shares (and a few more) with a $106 handle. Yes, as I trade on a FIFO basis, this kind of activity does put a hickey on my net basis, but this kind of trading mentality also preserves capital.

The Palantir News

For those who had not seen the news, there were two headline-level catalysts for Palantir's sell-off on Wednesday. 

One, on Tuesday night, Palantir CEO Alex Karp had filed with the SEC changes to his Rule 10b5-1 trading plan where he could sell up to 9.975 million shares through September 12, 2025. At the time of the filing, that total of shares would have come to $1.23 billion worth of stock. While huge insider sales are not unusual, especially in stocks where there have been "windfall creating" gains made over a short period of time, the markets can take this as a sign that perhaps the one running the business now sees the share price as overvalued.

The second item could directly impact Palantir's business. Secretary of Defense Pete Hegseth, in a memo dated February 18, instructed senior Pentagon leadership, combat commands, Defense Department agencies, the service branches and civilian agencies to propose 8% spending cuts to their estimated expenditures for each of the five fiscal years starting with 2026. 

Hegseth did list 17 areas that may be fully or partially exempt, including border enforcement, the Virginia class submarine, homeland missile defense, the new collaborative combat aircraft, one-way attack drones, cybersecurity, munitions and private sector medical care.

Interestingly...

RTX RTX, Lockheed Martin LMT and General Dynamics GD all closed out Wednesday's regular trading session in the green, while Northrop Grumman NOC and Kratos Defense & Security had "down" days. Then again, while Palantir, a big data crunching, AI-focused, intelligence gathering and analytics producing specialist, has soared since late last summer. Most defense and aerospace stocks have stumbled around since last autumn.

Less Than Three Weeks Ago...

Palantir crushed fourth quarter earnings. The firm posted an adjusted EPS of $0.14 (GAAP EPS: $0.03) on revenue of $827.52 million. That adjusted top-line print and the revenue number both easily beat consensus view, while that sales print was good enough for year-over-year growth of 36%.

During that quarter, U.S. commercial revenue increased 64% to $214 million, while U.S. government revenue increased 45% to $343 million. Palantir closed 129 $1 million-plus deals, 58 $5 million-plus deals and 32 $10 million-plus deals. The firm closed $803 million (new record) worth of U.S. commercial total contract value (TCV), which was up 134% year over year and 170% sequentially. Customer count increased by 43% year over year and by 13% sequentially.

An 8% haircut to that U.S. government slice of the business, which I doubt is realistic as what Palantir does is indispensable and, at least as of now, they do not have a legit competitor, would bring that $343 million print down to $315.5 million. Now, understand that the SecDef's memo does not impact fiscal 2025.

For the current quarter, the firm projected revenue of $858 million to $862 million, which was well above the consensus view at the time of $799 million. At the midpoint, that would be good for year-over-year growth of 35.6%. For the full fiscal year, Palantir projected revenue generation of $3.741 billion to $3.757 billion, which is again, well above the consensus of about $3.53 billion. U.S. commercial revenue was expected to grow at least 54%. That already was, but may now become an increasingly more, focused-upon part of the business. Palantir also expects to post positive GAAP operating and GAAP net income for each quarter of this year.

Wall Street in Response to Palantir

Five-star rated (at TipRanks) analyst Mark Schappel of Loop Capital initiated coverage of Palantir with a "buy" rating and a $141 target price. 

That means that my $133 target is no longer the "Wall Street high." Loop noted that Palantir provides a modern AI data platform that helps both government agencies and enterprises make data-driven decisions by detecting unusual or previously undetectable patterns in large complex datasets. The firm's ontology presents data to users in their own everyday terms and represents decisions in an enterprise. This makes the firm's platform a powerful tool for AI-driven decision-making.

Well-known Wedbush analyst Dan Ives, who is rated at 4.5 stars by TipRanks and also rates PLTR as a "buy" with a $120 target, posted twice on social media. First: "DeepSeek sell off for Nvidia NVDA a few weeks ago is this Pentagon worry sell off for Palantir. It’s noise and creates the oppy in our view. Very simply DOD budget cuts and more focus on efficiency bullish for PLTR… not a headwind. They will GAIN more share of DOD budget dollars." 

Then, Ives added: "This Palantir sell-off is the bears trying to poke holes yet again in a transformational AI story that is getting stronger by the day. More focus on efficiency for the government between DOGE and DOD budget cuts is bullish for PLTR given where they play in the Beltway."

The Palantir Stock Chart

The lift-off from the breakout from the cup-with-handle pattern is old news at this point. The stock's top on Wednesday fell about $7.50 short of our target. With relative strength suddenly pulled back towards the "neutral range" and the daily MACD about to produce a cross-under of the 26-day EMA by the 12-day EMA, the stock is set up technically for a period of weakness.

Two things we, who are long the stock, have to be on guard for are the development of a head-and-shoulders pattern, which would be bearish and an attempt by trading algorithms to fill that gap from early February. That would take the stock down to about $84.30. On the bright side, PLTR left a gap on Thursday morning that will require a tick at $108.60 or higher to fill. For now, the 21-day EMA (green line) becomes important. Lose that line and not only lose the swing crowd who may be partially out already, but also the weaker hands.

The fact that the 50-day SMA, which is where professional money may come to the stock's defense, is running in line with the lower bound from that early February gap is concerning. As for me, while this is no fun and certainly damaged my P/L ratio on Wednesday, I will continue to trade around my existing long position. I am going nowhere. My children and grandchildren will hold equity in PLTR.

Target Price: $133 (reiteration)

Add: 21-day EMA

Add aggressively: Down towards the 50-day SMA

Panic: Wrong guy. You must be thinking of someone else.

At the time of publication, Guilfoyle was long PLTR, RTX, LMT, GD, NOC, KTOS and NVDA equity.