Jefferies analysts caution that Palantir Technologies (NASDAQ: PLTR) could encounter additional declines in 2025 due to potential multiple compression. This warning follows a significant 15% dip in its year-to-date performance.

Key Factors Impacting Palantir’s Valuation

1. Valuation Dynamics

   • Palantir currently trades at 46 times enterprise value-to-next-twelve-months revenue (EV/NTM revenue). This valuation is over twice that of the next highest software competitor.
   • This elevated premium follows a staggering 341% growth in 2024, likened to a bubble period for high-growth stocks.

2. Insider Trading Trends

   • Insider selling has been substantial, with CEO Alex Karp divesting over $2 billion in shares and other executives selling $600 million within the past five months.
   • This trend could deter new investors, adding pressure to Palantir stock.

3. Potential Multiple Contraction

   • Palantir’s trading multiple has contracted by 15% YTD, dropping from 55x to 46x, which follows a strong 282% expansion in 2024.
   • Analysts forecast that evolving macroeconomic conditions may lead to further pressures on valuation multiples.

Changing Landscape of Shareholder Composition

• Institutional ownership has surged by 5 percentage points to 32%, largely influenced by Palantir’s acquisition into the Nasdaq 100 in December 2024.
• This shift may diminish the retail-driven premium attached to the stock, creating additional valuation challenges.

Investment Outlook for Palantir

Palantir’s performance in 2025 will depend heavily on navigating high valuation metrics and continuous growth while managing broader market challenges.

For deeper insights into Palantir’s financial direction:

• Explore Full Financials to review income statements and balance sheets.
• Analyze Ratios (TTM) for a breakdown of valuation, profitability, and leverage ratios.