Is Palantir’s Collapse a Buying Opportunity?

By Douglas A. McIntyre Published Feb 20, 9:15AM EST

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AI and defense stock Palantir Technologies Inc. (NASDAQ: PLTR) just dipped 12%.
Is this a buying opportunity for investors?

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Is Palantir’s Collapse a Buying Opportunity? — © solarseven / iStock via Getty Images

Two things happened to bring down Palantir Technologies Inc. (NASDAQ: PLTR | PLTR Price Prediction) stock yesterday. Neither should hurt earnings or revenue at all.

Shares were down by as much as 12% after CEO Alex Karp filed paperwork with the U.S. Securities and Exchange Commission that showed he could sell as many as 10 million shares in the next six months. Another reason for the stock’s retreat was that an official said the Trump administration proposed deep cuts in the defense budget.

Senior executives often set stock sales plans under what the SEC calls rule 10b5-1. According to Investopedia:

A 10b5-1 plan is a written agreement between a company insider and a brokerage firm that details when and how the insider will sell company stock. It’s a way for insiders to sell stock while avoiding insider trading accusations.

So, it is a way for an executive to get some value out of stock or options they have accumulated. Karp’s plan likely has nothing to do with more than financial planning.

The second issue is whether the U.S. Department of Defense will make deep cuts in its budget. The Washington Post reports, Defense Secretary Pete Hegseth “ordered the proposed cuts to be drawn up by Monday.” The story was based on a memo the Post had obtained.

To cut the defense budget would mean a battle in Congress, and perhaps within the Republican Party. Many members of Congress view the defense budget as key to the future of America, particularly because of growing threats from China and Russia. A memo is nothing more than a memo until there is a detailed proposal to take to Congress. And the planning phase of this process appears to be in very early stages.

Palantir’s stock is up 48% this year because of its advances in artificial intelligence, strong earnings, and military spending around the world. The two things that made the stock sell off had nothing to do with these catalysts. In the most recently reported quarter, revenue rose 52% to $827 million. The company’s guidance was for a year of huge revenue growth.

Nothing has occurred to change Palantir’s future.

I Was Convinced Palantir Was Just a Meme Stock, but These 2 Insights Changed Everything

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.