- Summary:
- Palantir share price declined for the third straight session on Monday, under pressure from profit taking. However a reversal isn't far off.
Palantir share price declined in Monday’s trading session, losing 2.93 percent of its value to trade at $30.85. That marked the third successive dip by the stock, likely driven by profit-taking. Despite hitting turbulence in recent trading, Palantir (NYSE: PLTR) is +14.2 percent in the last month and +82 percent year-to-date.
Why a reversal is cooking
Palantir returned a net profit in each of the last seven quarters, underlining its strong balance sheet. In the second quarter of the year, the company reported earnings of $678 million, resulting in an EPS of $0.06, beating analysts’ forecast of 3 cents per share. Revenue for the quarter resulted in a 27.15 percent YoY growth. Looking ahead, the management forecasts a revenue growth of $2.74-$2.74 billion for a fiscal year 2024 growth of +23 percent.
The figures above form a strong basis for the Palantir share price to continue rising. Furthermore, the company has developed a reputation of a serial deal maker with tens of commercial and government agencies and departments.
However, some of its deals might fail to yield the intended results. For instance, Palantir offloaded more than 240k shares in Rubicon Technologies, a waste recycling technology solutions provider in which it has a 10 percent stake. The company received a delisting notice from the New York Stock Exchange in June, after its market cap dropped below the listing standards.
However, its forays into AI and machine learning has seen it strike profitable deals with multiple companies and the US government, including the US Army. It just won a $480 million contract with the US Department of Defence last quarter for AI and Machine Learning training.
One of its recent headline-grabbing deals was a partnership with Microsoft, announced earlier in August, that integrates Palantir software into Microsoft’s Azure cloud services. Look out for Nvidia’s earnings release on Wednesday, as it will almost certainly inject new volatility into AI stocks, including Palantir.
Momentum indicators
Palantir price momentum indicators on the 4-hour chart signal bearish control, as the price is below both the 20-EMA ($31.56) and 50-EMA ($30.90). However, the 20-EMA is still above the 50-EMA, signalling a bullish undercurrent. Meanwhile, the Money Flow Index reads 1.4, underlining the negative money flow, but signaling that a reversal could be imminent, as the stock is oversold.
Support and resistance levels
The chart below suggests control by the sellers if resistance persists at the 31.10 pivot mark. Based on that momentum, we could see the first support at 30.80, but extended control by the sellers could breach that mark and test 30.50.
On the other hand, if the price breaks above 31.20, the upside could encounter the first resistance at 31.50. However, if the bullish momentum persists, the resistance could be broken, leading to the invalidation of the downside narrative. Furthermore, that could lead to further gains to test 31.80.
