Palantir Bulls Pile Onto $60 Call Options Amid Stock's Record-Breaking Rally
$Palantir (PLTR.US)$ bulls are piling onto call options that give the holders the right to buy the stock at $60 by the end of next week amid the stock's record-breaking rally.
The stock has been climbing to an all-time high everyday since reporting third-quarter results that blew past analysts' estimates last Monday. Over the past four days, the stock rallied 39% to a $57.08. That more than $15 advance increased the probability that the $60 call options could expire in-the-money, boosting its appeal to investors and speculators.
There's more to the stock rally beyond the fundamentals of the company whose quarterly revenue has consistently exceeded market consensus every quarter since its trading debut in September 2020. The close ties between its Chairman Peter Thiel and the incoming Trump administration is one angle that may be contributing to the positive sentiment for the software company that derives more than half of its revenue from government contracts.
The Telegraph named Thiel among the billionaires who will shape President-elect Donald Trump's second term at the White House, alongside $Tesla (TSLA.US)$ Chief Executive Elon Musk, Hedge fund manager John Paulson and a few others. Business Insider referred to Thiel as the "kingmaker" who played a big role in putting Trump's running mate JD Vance on the path to the vice-presidency, while CBS News called him the billionaire who fueled Vance's rapid rise to the Trump VP spot.
Since market closed on Monday, the tally of outstanding contracts, known as open interest, more than tripled to 16,773 for those $60 calls expiring in seven days, data compiled by Bloomberg showed. That came as increasing demand pushed the price of those contracts more than five-fold.
The stock has rallied 233% this year, outpacing the 216% climb for AI-favorite $NVIDIA (NVDA.US)$ and Tesla's 27% advance. That means Palantir is now trading at 122.9 times its projected earnings over the next 12 months. That's pricier than Nvidia's forward PE ratio of 43.77 and Tesla's 97, according to Capital IQ data.
That high valuation worries analysts who cover Palantir. Only 15% of them have a buy rating on Palantir, while 35% have a sell recommendation. In contrast, 44% of analysts who cover Tesla have a buy rating on the stock, while in the case of Nvidia, it's 89%.
Analysts have an average 12-month target price for Palantir of $36.80, implying a 36% downside potential for the stock that last traded at $57.29. The big question remains: are analysts using the right modeling in predicting the valuation for Palantir?
The average target price for the stock has trailed its share price since at October 2023, data compiled by Bloomberg show.
Share your thoughts on Palantir and the analysts' ratings on the stock in the comments section below. And if you want to express your sentiment toward the stock, please vote and let us know why.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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XxxxXxxxxXxxxx : Is the valuation too high?
104866360 : How they buy if price never hit 60?
Moojobrew : wonder what it can do with my left over $ 5.89
104247826 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Adrianlim90 : 1
Kellz1 104866360 : They are buying a $60 call Option. You can buy a $60 strike price before the price get to $60.
105709903财 : ok
103914482 Kellz1 : Meaning majority already guess this stock will sure hit $60 and beyond?
101692362 104866360 : That’s when they lose their option fee
101692362 103914482 : Yes that’s rught
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