Palantir Stock Selloff Intensifies: What's Behind the Recent Plunge?

The Palantir Technologies stock (PLTR) has been on a rollercoaster ride recently, with the stock price plummeting by nearly 30% in less than two weeks. This sudden selloff has left investors scratching their heads, wondering what's behind the recent plunge in the data analytics giant's share price. In this article, we'll delve into the primary factors driving the Palantir stock selloff and explore how analysts' ratings and price targets have influenced investor sentiment.



1. Defense Budget Cuts: The U.S. government's plans to cut defense spending by 8% annually over the next five years have raised concerns about Palantir's revenue, as 40% of its revenue comes from U.S. government contracts. This news, combined with the defense budget cuts, contributed to the stock's decline. As reported by Schwab Network on February 25, 2025, "U.S. government spending cuts could impact the data analytics and military contractor firm's bottom line."
2. CEO Stock Sales: Alex Karp, Palantir's CEO, announced plans to sell upwards of 10 million shares, which spooked investors. This news, combined with the defense budget cuts, contributed to the stock's decline. As reported by Barrons on February 25, 2025, "The stock has come crashing down, losing 30% in less than two weeks, following news that the company’s chief executive sold $1 billion worth of stock and warnings about cutbacks in government spending."
3. Market Uncertainty: The broader market sentiment and uncertainty have also played a role in Palantir's stock performance. As mentioned in a Market Watch article on February 23, 2025, "Momentum stocks popular with the retail crowd continued to slide on Tuesday, adding to their woes from the past week."

Analyst ratings and price targets have played a significant role in the Palantir stock selloff, as they often influence investor sentiment and trading decisions. According to the provided information, the average analyst rating for Palantir stock from 20 stock analysts is "Hold," indicating that analysts believe this stock is likely to perform similarly to the overall market. This neutral rating may have contributed to the selloff, as investors might have been discouraged from buying the stock due to the lack of a more bullish recommendation.

Price targets, which represent analysts' predictions for a stock's future price, have also influenced investor sentiment. The average 12-month price forecast for Palantir stock is $78.28, which is a decrease of -10.88% from the latest price. This bearish price target may have contributed to the selloff, as investors might have been discouraged from buying the stock due to the expectation of a decline in its price.

Moreover, the recent selloff in Palantir stock has been accompanied by a decrease in the number of analysts with a "Strong Buy" rating, from 3 in February 2025 to 1 in March 2025. This decrease in bullish sentiment may have contributed to the selloff, as fewer analysts were recommending the stock as a strong buy.

In conclusion, the recent selloff in Palantir stock can be attributed to several primary factors, including defense budget cuts, CEO stock sales, and market uncertainty. Analyst ratings and price targets have also played a significant role in the selloff, influencing investor sentiment and contributing to the decline in the stock's price. Despite the recent selloff, analysts remain optimistic about Palantir's future financial performance, with average revenue and EPS forecasts indicating continued growth. As the situation unfolds, investors should keep a close eye on Palantir's progress and consider the potential opportunities and risks associated with the company's stock.