Despite positive momentum for the broader market, Palantir (PLTR 1.38%) stock is losing ground again. The company's share price was down roughly 2.7% as of 1:15 p.m. ET Wednesday, and the pullback coincides with news that the data analytics company is partnering with Jacobs Engineering Group on new software for infrastructure and national security services.
While news of a partnership that could potentially accelerate Palantir's expansion into the infrastructure-software services market doesn't look worrying in and of itself, investors may be disappointed that the company isn't opting to go it alone or proceed on these initiatives with a different partner. The company's stock now trades down roughly 70% from the high that it hit in January 2021.
Is it time to pounce on Palantir?
Palantir has taken a beating as investors have shied away from growth-dependent software companies, and shareholders have been left waiting for positive catalysts capable of driving sustained rebound momentum for the stock. The company's fourth-quarter earnings report arrived last month with sales that topped the market's expectations, but non-GAAP (adjusted) earnings per share of $0.02 fell short of the average analyst target for per-share earnings of $0.04, and the market is becoming more cautious about the business's growth outlook.
While Palantir managed to grow sales 34% year over year to reach $433 million in Q4 and reaffirmed its target for sales growth of at least 30% in each year through 2025, some investors are worried that sales growth from public sector customers is slowing. Revenue from government customers increased 26% year over year in Q4, which represents a pretty stark deceleration compared to the 77% growth the customer segment posted across 2020. With sales growth from the public sector slowing, investors may be looking at the recently announced partnership with Jacobs as a sign that Palantir needs more help than previously expected when it comes to expanding in the infrastructure and national security markets.
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Following recent sell-offs, Palantir now has a market capitalization of approximately $24 billion and is valued at roughly 59 times this year's expected adjusted earnings and 11.8 times expected sales. The company still has a growth-dependent valuation even after a dramatic stock price pullback over the last year, and it's fair to say that there's some speculation involved in charting the company's trajectory.
Because of this, there's a good chance that the stock will continue to see volatile trading in the near term. However, it could be a worthwhile play for long-term investors who are willing to take on risk in pursuit of big gains. Data analytics services will only become increasingly vital to success in the public and private sector, and I think Palantir stock offers intriguing upside for long-term investors at current prices.
