Palantir stock analysis: the bears may be planning a serious assault

The Palantir share price analysis shows a negative set up, indicating the bears are pounding the stock citing its high valuations

Palantir Technologies Inc (NYSE: PLTR) is a data analytics company catering for the government through its software Gotham and commercial customers with its software Foundry.   

The bullish case for the stock rests on the fact that the company is in an advantageous position to capitalise on the huge data analysis requirement of the defence sector. Although the company was founded in 2003, it is expected to clock a strong 30% growth in 2021.

On the other hand, the bearish case for the stock starts with lofty valuations. At the current market capitalisation of about $40bn and estimated revenues of $1.45bn for December 2021, the stock trades at 26 times its projected revenues. 

Another negative for the company is that its growth is expected to slow down to 30% in 2021 from 47% in 2020. Analysts also highlight that growth in Q4 2020 was largely from government contracts, indicating that the company has not been able to ramp up the commercial side of its business.

The fundamentals show promise but the valuations are rich. This makes it difficult to value the Palantir stock. Let’s perform the Palantir stock price analysis of the weekly chart to determine the long-term trend.

Palantir share price technical analysis: weekly chart

The Palantir share price has seen a roller-coaster ride. Within a short period, the stock rallied from $8.88 in October 2020 to an all-time high of $44.84 in January, a rise of 405%.

Usually, such vertical rallies are unsustainable unless they are backed by strong fundamentals. Profit-booking from the highs dragged the price down to $20.10 in March, with the stock losing 55% in value.  

The bulls have been trying to defend the $20 levels for the past few weeks but the failure to build on the rebound suggests that demand dries up at higher levels. If the bears sink the price below $20, the selling could intensify and start the next leg of the downtrend.

The Palantir stock price analysis of the weekly chart shows that the bears have the upper hand. Let’s perform the PLTR stock analysis of the daily chart to see if there are any bullish set-ups on the horizon.

Palantir share price technical analysis: daily chart

The stock has formed a descending triangle pattern on the daily chart, which will complete on a close below $20. This bearish set-up has a target objective of $10. The down-sloping moving averages and the relative strength index (RSI) in the negative territory suggest the bears have the upper hand.

However, if the stock rebounds off $20, it will suggest that the bulls continue to accumulate at lower levels. The stock is likely to pick up momentum if the bulls can push and sustain the price above the resistance line of the triangle.

Such a move is likely to trap the aggressive bears, who may then be forced to cover their short positions. Such a move could result in a short squeeze, driving prices higher.

On the way up, the first stop could be $30 and if that level is crossed, the up-move may reach $39.07.

Palantir stock: buy or sell at these levels?

The Palantir share price analysis shows the stock has formed a bearish pattern. If the stock breaks the $20 support, traders may step aside as that could result in a quick fall to $15. Buying a falling stock is a loss-making proposition.

However, if the bulls push and sustain the price above $26.10, long positions could be initiated. The initial stop-loss for this trade could be kept at $20, which could be trailed higher as the stock moves up.

Trade Palantir – Palantir shares price

Palantir Technologies Inc.
Daily change
25.09
Low: 24.96
High: 25.69

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