During today's morning trading session, Palantir Technologies slipped to $25.06 per share. It's still 28.05% above its mean target price of $19.57, so there may still be room for more downwards movement -- even after today's -1.1% drop. Analysts are giving the Information Technology stock on average rating of hold, with target prices ranging from 5.0 to 35.0 dollars per share.
The market sentiment on the stock is decidedly optimistic, since Palantir Technologies has a short interest of only 5.0%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
A possible indicator of market sentiment on a stock (besides its share price, of course) is the portion of institutional investors that make up its shareholders. Institutions such as banks, hedge funds, and wealth managers deploy significant resources towards identifying good investments. If they are invested heavily in a given company's stock, it could mean it's a good investment. Or it could mean the company is being targeted by a takeover attempt.
For what it's worth, institutions own 41.4% of Palantir Technologies's shares, which is an average amount. It means that many institutions are invested, but not to the extent that they would be in a stock such as Apple or Amazon, whose institutional ownership rates hover around 60%. Bear in mind that institutional ownership is just one piece of the puzzle in determining market sentiment, and you should not consider this factor alone in making an investment decision.
To sum up, Palantir Technologies is probably the subject of mixed market sentiment because of an analyst belief that shares are overpriced, a hold rating, an average amount of shares sold short, and only a small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about PLTR:
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The stock has trailing 12 month earnings per share (EPS) of $0.09
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Palantir Technologies has a trailing 12 month Price to Earnings (P/E) ratio of 278.4 compared to the S&P 500 average of 15.97
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The company has a Price to Book (P/B) ratio of 15.86 in contrast to the S&P 500's average ratio of 2.95
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Palantir Technologies is a Technology company, and the sector average P/E and P/B ratios are 35.0 and 7.92 respectively
