Palantir stock price slowly forms alarming pattern ahead of earnings

Palantir stock price has crashed into a technical bear market, moving from a high of $208 in November to the current $150. It has also formed a highly bearish chart pattern pointing to more downside in the near term as the company prepares for its earnings.

Palantir stock price technical analysis 

The daily timeframe chart shows that the PLTR stock price has been in a strong downward trend in the past few months. It has moved from a high of $208 in November to the current $150.

The stock has formed the highly bearish head-and-shoulders pattern, which is made up of a head, two shoulders, and shoulders. In this case, it is now hovering near its neckline at $147.

The stock has now moved below the 50-day and 200-day Exponential Moving Averages (EMA), meaning that a death cross pattern could be about to form.

It has moved below the Supertrend indicator and the ultimate support level. Therefore, the most likely scenario is where it drops, potentially to the psychological level at $100 in the near term.

PLTR stock chart | Source: TradingView 

Palantir is facing major headwinds ahead of earnings 

The ongoing Palantir stock price crash is happening as the company faces more headwinds ahead of its earnings. One of the recent headwinds is its relationship with the Department of Homeland Security and ICE. However, chances are that the outrage will not have an impact on its business.

There are concerns about its valuation, which has become overstretched in the past few years. Data shows the company has a forward price-to-earnings ratio of 217, much higher than the sector median of 24. The multiple is also much higher than the five-year average of 135.

A P/E ratio of 217 makes it more expensive than other companies in the United States. A good example of this is NVIDIA, a company that dominates the AI data center industry. 

NVIDIA has a faster growth trajectory and much higher margins than Palantir. Yet, its forward price-to-earnings ratio is 40. 

Another way to look at its valuation is to look at its revenue and profits. Data shows that Palantir’s revenue rose from $1 billion in 2020 to $2.8 billion in 2024. Its profit stood at over $1 billion in the trailing twelve months (TTM). 

Analysts believe that its revenue in 2025 will be $4.4 billion, followed by $6.2 billion this year. As such, its annual revenue will cross the $10 billion mark in 2029.

The company now has a market capitalization of $361 billion, meaning that its forward price to sales multiple is 58, which makes it highly expensive.

Analysts expect the upcoming results to show that its upcoming results will show that its revenue to be $1.34 billion, up by 62% YoY. Its earnings per share are expected to come in at 23 cents, up by 14 cents.

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