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Why Palantir Stock Was Sinking Today

By Keith Noonan – Dec 20, 2021 at 6:51PM

Key Points

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The big-data analytics specialist's share price is now down roughly 24% across 2021's trading.

What happened

Palantir (PLTR 2.75%) stock fell again on Monday. The data analytics' specialist's share price closed out the daily session down roughly 5.8%. 

Palantir actually announced a new partnership today, but investors selling out of growth-dependent stocks caused the company's share price to lose ground. The S&P 500 closed out the day down roughly 1.1%, while the even more tech-heavy Nasdaq Composite index was down 1.2% in the session. 

A 3D chart map.

Image source: Getty Images.

So what

Palantir published a press release Monday announcing that it had formed a new multiyear partnership with Dewpoint Therapeutics. The team-up will see Palantir's Foundry analytics platform being used to help power Dewpoint's initiatives for developing treatments and cures for challenging diseases. Despite announcing the addition of a new enterprise client, the tech company lost ground amid momentum for the broader market. 

Now what

Palantir has been growing its business at a rapid clip, and it expects to be able to expand sales at an annual rate exceeding 30% from 2021 through 2025. The company's Q3 sales climbed 36% year over year, and the strong revenue growth was paired with increasing the company's free cash flow target for this year from more than $300 million to more than $400 million, but the stock has lost ground as investors have become more cautious about highly growth-dependent tech plays.  

While the S&P 500 and the Nasdaq Composite have climbed roughly 21.6% and 16.2% across this year's trading, respectively, gains have been largely concentrated in the hands of a few megacap winners. 

PLTR Chart

PLTR data by YCharts

Palantir now has a market capitalization of roughly $36 billion and is valued at roughly 23.6 times this year's expected sales. The stock has potentially explosive upside if the company can continue to add new public and private customers and increase spending by providing additional services to clients, but shares could continue to see volatile trading in the near term if investors continue shying away from risky growth stocks. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

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