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Palantir Sees Millions of Dollars in Bearish Option Trades as Stock Tumbles
$Palantir (PLTR.US)$ saw millions of dollars in bearish option positions after the stock's 340% surge last year fueled concerns that the rally has gone too far too fast.
Morgan Stanley analysts led by Sanjit Singh gave the stock an underweight rating and a price target of $60, implying a 25% downward potential from Friday's close. While they noted that Palantir has won the early rounds of the race to capture demand driven by artificial intelligence, they noted that the "valuation premium negative skews risk/reward."
"In the past 18 months, Palantir has driven better-than-expected U.S. commercial traction, U.S. government deal momentum, and OpEx discipline," the analysts wrote in a note Monday. OpEx refers to operating expenses. "However, this is well reflected in shares."
While shares tumbled 5.7% to $75.36 Monday, they're still up 352% from a year earlier. That surge means Palantir now trades at almost 361 times earnings, pricier than $NVIDIA (NVDA.US)$'s 60 times. Palantir's multiple has gone far ahead of expectations given the 41% upward revision in its free cash flow estimate and the 10% adjustment in the revenue outlook.
The biggest of the bearish block trades involved an active buyer paying a $4.45 million premium for put options that give the holders the right to sell 700,000 Palantir shares at $72.50 each by Feb. 21. The contract price jumped 24% as the stock price declines, boosting the odds that option would be in the money before it expires.
The second largest block trade involving Palantir was posted at 10:19:10 a.m. An active seller collected a $1.6 million premium for issuing call options that give their holders the right to buy a combined 155,000 Palantir shares at $120 each by Jan. 16, 2026. The 1,550 contracts, each covering 100 shares, were sold at $10.35 a share. The call options would expire worthless should Palantir shares continue to trade below that strike price of $120 in 375 days.
To put things in context, Nvidia, the most popular stock option, has seen revenue climb 94% in its latest quarter, more than triple the pace of gains for Palantir. And yet the stock of the dominant player in powerful chips behind artificial intelligence (AI) applications is only trading at 51.5 times future earnings, a lower multiple compared to Palantir's 198 times.
That might explain analysts' average price target on Palantir of $46.39, implying a 39% downward potential. That gap between the stock price and the target price is near the widest it's ever been.
Monday's decline took the share price below the middle line of the Bollinger Band, a sign to some who study charts that the stock could be headed for the lower line of that band, and the trend may be bearish. Still, the remaining 14 technical indicators tracked by moomoo don't agree, with all but one of them showing neutral sentiment.
Share your thoughts on Palantir and Nvidia in the comments section. Is the peak over for Palantir or do you expect the stock to keep rising? Let your voice be counted by voting below.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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H H045 : Palantir is led by a raging genocidal ceo who’s hell bent on eliminating Palestinians. I hope this evil company and its diabolical ceo fail miserably.
Mr Brooks H H045 : Not really
Chak : Yeah, I was wondering when it is going to dump the institutions are ready to dump
David Johns :
pump and dump baby. literally the entire basis of stocks.
plus.. ever heard of a 50% retracement.. gosh
David Johns Chak : you mean they're ready to cash in realized gains
Chak David Johns : Looks like your pro intuitions you’re working for one of them trying to destroy retailers
Meme_Short_Queen : not worth more than $5
David Johns Chak : bro I'm literally networth under 15k. this is just common knowledge and I used a technical term.. realized gains.
TheNorthStar : Palantir and nvidia, while both artificial intelligence companies, comparing these two into the same category i believe would be a mistake. Does Palantir NEED $NVIDIA (NVDA.US)$ for government contracts? Does nvidia NEED $Palantir (PLTR.US)$ to make its hardware? Palantir will keep growing due to its already heavily relied upon a.i. software development and implementation inside gov. Infrastructure. Nvidias a juggernaut of profit, pushing the hardware end of this a.i.”, let’s not forget $Advanced Micro Devices (AMD.US)$ nipping at its heels. In my view it’s hard to compare or contrast any race between Palantir and nvidia when a much more interesting race might be worth more of our time in contemplation.
70727465 : down to 58 and rally back
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