Big tech stocks have had a mixed earnings season so far this year. Not only have results been not as optimistic as expected, but the looming threat of higher inflation and increased interest rates are hurting prospects for growth stocks. One big tech stock that popped up in headlines Wednesday was Palantir Technologies (NASDAQ: PLTR), although not for good reasons. Shares fell today after Cathie Woods’ Ark Invest dumped its entire stake in the data company.
Back in 2021, Ark Invest bought over $1 billion worth of shares in Palantir, which helped propel the stock to a healthy $30 per share range. However, Peter Thiel’s data giant ended up being one of the worst-performing stocks so far this year, now down to around $5 per share. The stock continued to plunge after Palantir reported a worse-than-expected Q4 earlier this month, much to the chagrin of long-time supporters.
After suffering all these losses, it appears Ark Invest has decided to sell over 11 million shares that it bought, now for a measly $148.9 million. Just before that, Cathie Woods initially halved her fund’s exposure to Palantir as well.
Wood’s decision to cut Palantir comes amidst broader criticisms from investors. This includes the claims that her holdings are more or less a collection of bubble stocks. In contrast, Ark Invest has doubled down on some of its larger, successful holdings. This includes Tesla (TSLA), which Ark bought another $20 million worth of shares on Tuesday.
Five separate Ark funds owned shares in Palantir, ranging from just 61,000 to over 1.1 million shares. All of these five funds have been down between 14.5-32.9% since the year began. In comparison, Palantir has been down 42.5% since January.
Palantir stock shed another 3.5% following the years. Compared to 12 months ago, the data company is down 73.5%. While most big tech companies are profitable, Palantir is still failing to report any profits after all these years.
Although such a steep decline might make Palantir more appealing, there’s also the consideration that stocks are rotating out of growth and into value. Higher inflation rates, as well as pending rate hikes, are expected to hurt fast-growing, low-profitability companies. It also doesn’t help that many experts believe the markets have reached their peak and that a correction is coming sometime soon.
As of writing, just two Wall Street analysts have a buy rating on Palantir. In contrast, there are four that are strictly neutral, while another three remain firmly bearish. With Palantir’s most famous supporter now ditching the company, the situation looks even worse for the data giant.
Palantir Technologies Company Profile
Palantir Technologies provides organizations with solutions to manage large disparate data sets in an attempt to gain insight and drive operational outcomes. Founded in 2003, Palantir released its Gotham software platform in 2008, which focuses on the government intelligence and defense sectors. Palantir expanded into various commercial markets with its Foundry software platform in 2016 with the intent of becoming the data operating system for companies and industries. The Denver company had 125 customers as of its initial public offering and roughly splits its revenue between commercial and government customers. – Warrior Trading News
