Palantir Technologies (PLTR 1.40%) stock, one-time star of the defense technology industry, tumbled 5.2% through 12:50 p.m. ET Thursday. In fact, earlier in the morning, the company briefly set a new 52-week low share price of $106.39.
And here's the weird thing: It dropped not on bad news but on good news.
Image source: The Motley Fool.
Palantir's still winning contracts
Monday, Palantir confirmed it will play a role in the U.S. Army's Next Generation Command and Control (NGC2) project, helping modernize command-and-control. Separately, the company announced a partnership with Zeta Global (ZETA +1.31%) to use Palantir's AI infrastructure to support Zeta's marketing.
But here's the thing: Palantir didn't put a dollar value on its NGC2 contract. And according to Wedbush analyst Dan Ives (who's a Palantir fan, with an outperform rating and a $230 price target), the Zeta deal will "drive more than $100 million in revenue for Zeta over multiple years."
That's not a lot of money relative to Palantir's $5.2 billion annual revenue stream. What's more, this is revenue Zeta will collect with help from Palantir. What it pays Palantir for that help will almost certainly be much less than $100 million and "over multiple years."
NASDAQ: PLTR
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What it means for Palantir
So neither contract promises to move the needle much for Palantir, restore the one-time tech darling's momentum, or pull Palantir out of its 52-week funk. But here's the good news for Palantir investors:
Valued today at $272 billion, generating $2.7 billion in annual free cash flow, and expected to grow earnings at 54% annually, Palantir is finally approaching a defensible valuation -- a price-to-FCF-to-growth ratio of less than 2.0.
I'm not quite ready to buy Palantir at this price. But if the stock drops much more, I could finally see that happening.
