Can I interest you in a one-day rally of 25%? That’s what investors in Palantir Technologies (NYSE:PLTR) received on Jan. 22. On that day, PLTR stock jumped to its highest level since going public in October.
And things may start to get really fun for the Big Data company. There are three events in the next month that will provide some necessary color for investors. First, the company is having its Demo Day on Jan. 26. That event will give the company an opportunity to showcase the capabilities of its Gotham and Foundry platforms. Second, the company will report earnings in February. And finally, also in February, the lockup period after the company’s IPO will expire.
Any one of these events could cause significant movement in PLTR stock. Put them all together and you may see significant movement. But with a stock that was already reported to be overvalued prior to this latest gain, will these events be a buying or selling opportunity?
Demo Day Should Provide a Lift
The largest takeaway for investors is that this is a gigantic new business pitch for Palantir. As noted above, the company will get a chance to demo its software platforms. Palantir does a significant percentage of its business with the federal government.
As I’ve noted in a prior article about Palantir, there’s no real reason to believe the company won’t continue to receive contracts from the federal government. However, in a nod to the fact that it is now publicly trading, it makes sense for Palantir to try to broaden its customer base.
But let’s be honest. Events such as Palantir’s Demo Day are a tease to a certain extent. For example, according to the press release that provided additional details about the event, Palantir has shown a nearly 4x increase in sales volume from the second quarter of 2020 to the fourth quarter 2020.
And that is causing some analysts to believe that Palantir is going to delight analysts with a year-over-year gain in sales that will go beyond the 44% increase that analysts are currently projecting. That was a significant reason the stock burst forward from a level of resistance.
Earnings Will Provide Necessary Perspective
Palantir is forecast to report quarterly earnings on Feb. 11.
Investors know the drill. If the company beats earnings and revenue expectations, the stock is likely to go higher. And the opposite is true as well.
In any event, the earnings report will provide a confirmation of whatever investors hear from the company on Demo Day.
Is the Lockup Expiration a Big Deal?
My short answer is that it’s probably not. If the company does indeed show higher growth than previously forecast, it would seem unlikely that Palantir’s insiders would unload a massive amount of their shares to get a quick profit. And that would mute any selling pressure.
Plus, the stock has already soared so high that even a drop of 1% to 3%, which often correlates with the end of a lockup period, is already well absorbed by the stock’s recent gain.
But “if” is a word that doesn’t mean certainty. The company may not give analysts a number that dazzles them. Plus, investors don’t always behave the way we expect.
PLTR Stock Is a Buy Now or Later
In terms of a stock, value is becoming whatever investors are willing to pay. This doesn’t mean you should ignore concerns about Palantir’s valuation. It’s only a caution that the bullish case for Palantir could go on a lot longer than an analyst’s bearish outlook.
And from a technical standpoint, it does appear that Palantir shares are likely to move higher and maybe to a significant degree. In a prior article, I suggested that if you don’t already have a position in PLTR stock, you may want to wait until after the lockup period ends. The recent price action has me rethinking that a little. But at this point, it couldn’t hurt to see what the company reveals at Demo Day.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.