Palantir Technologies (PLTR) has officially joined the ranks of the S&P 500, a long-awaited milestone for the data analytics company. This entry is a major win for Palantir, as it attracts the attention of institutional investors who are required to hold S&P 500 constituents. Retail investors, who have been a driving force behind PLTR’s growth since its 2020 direct listing, are also likely to take notice.
Palantir has been a hot topic in the tech world, and its inclusion in the S&P 500 only fuels the debate. The stock has skyrocketed 114% in 2024, leaving many wondering if it’s time to hop on board or if this is just another bubble.
One immediate impact of the S&P 500 inclusion is the anticipated influx of institutional buying. While institutional investors have been net buyers of PLTR for the past year, their participation is expected to increase significantly now that it’s a part of the index. This is evident in the spike in trading volume on September 23, the day Palantir entered the S&P 500.
The question remains: how high can PLTR go? Bullish analysts like Dan Ives of Wedbush maintain a strong outlook, with a $38 price target and a potential upside of $50. Bank of America has also added Palantir to its US-1 list, showcasing its confidence in the company’s future.
Since the S&P 500 announcement, Palantir has secured two notable contracts: one with the U.S. Army for its Maven Smart System AI tool, valued at nearly $1 billion over five years; and another with Nebraska Medicine, signifying the company’s expansion in the healthcare sector. This suggests that Palantir’s growth story is far from over.
Despite the positive developments, investors need to exercise caution. Palantir’s current valuation is considered high by traditional fundamental metrics, which could limit further upside potential. While the company has a bright future, the stock’s trajectory might not be a smooth climb.
The next major catalyst for Palantir will be its earnings report on November 7th, 2024. This will be a crucial time to assess the company’s performance and gauge market sentiment. Given the upcoming U.S. presidential election, the market could be volatile in the days leading up to the earnings release.
Instead of jumping in with a large investment, a more prudent approach might be to adopt a dollar-cost averaging (DCA) strategy. This involves investing a fixed amount of money at regular intervals, regardless of the stock’s price. DCA helps mitigate price risk and allows you to average down your cost per share if the stock experiences a pullback.
In conclusion, while Palantir presents an attractive investment opportunity, it’s important to approach it with a balanced perspective. Consider the company’s growth potential and the current valuation before making any decisions. DCA can be a valuable tool to navigate market volatility and reduce the impact of potential price fluctuations.
