Palantir Technologies Inc (PLTR stock) price drops as a major institution issues a bold downgrade

NYSE:PLTR has been one of many successful IPOs that have hit the public markets this year, although the company has yet to see sky-high price levels that other debuts like Snowflake (NYSE:SNOW) or AirBnb (NASDAQ:ABNB) have seen. On Friday, shares dropped 4.63% to close the trading week at $25.97 as the broader markets saw a pullback after hitting all-time highs earlier in the week. Palantir is still up over 185% since its debut at the end of September. But one analyst does have an issue with the high valuation at which Palantir is currently trading. 

That analyst is Brad Zelnick of Credit Suisse who stated that Palantir’s current valuation is “disconnected from its fundamentals” and that there may be some downside potential brewing. Zelnick downgraded the status of the stock to an underperform rating while raising the price target from $13 to $17, a fairly shocking number to investors which shows a near 40% drop from Friday’s closing price. Zelnick does reiterate that Palantir does offer a very unique data analytics platform but maintains that in its current state, the valuation does not match the baseline fundamentals of the stock.

Palantir stock price

The IPO lockup period for Palantir is also quickly approaching as insiders are able to sell their shares near the middle of February in 2021. While this is not always a contributing factor to the stock’s price, any sort of sell-off will result in a dilution of current shares. Zelnick’s report does seem negative, but investors need to remember that analyst upgrades and downgrades are just their opinion and not a definite outlook on how the stock will continue to perform.