Palantir Technologies (PLTR) stock has been on a rollercoaster ride in recent months, with shares surging 340% in 2024 and then taking a tumble. The stock closed at $80.69 on December 28, 2024, down from its peak of $102.89 earlier in the year. Now, an analyst warns that Palantir's stock could drop by as much as 20% in the near future.



The warning comes from Morgan Stanley analyst Sanjit Singh, who downgraded Palantir to "underweight" on January 6, 2025. Singh cited concerns about the stock's valuation, noting that Palantir's share price has surged 340% in 2024, leading to fears of overvaluation. Despite acknowledging Palantir's impressive commercial success and strong performance of its Artificial Intelligence Platform, Singh believes that the current stock price may have limited upside potential.



Palantir's recent performance has been a mixed bag. The company's stock rallied 340% in 2024, but it has also experienced a five-day losing streak and a 2.4% decline on December 30, 2024. Trading volume has been lower than average, with approximately 23,940,300 shares traded on that day, a 61% decrease from the average daily volume.

Palantir's recent contract wins and partnerships have been a driving force behind its stock price. The company secured a $400.7 million contract extension with the U.S. Army for its Vantage data analytics program and was added to the Nasdaq 100 index on December 23, 2024. However, the market's fear-driven sentiment, with the Fear & Greed Index sitting at 39, has contributed to the stock's recent slump.



Investors should be cautious about Palantir's stock price, as tech stocks can be volatile and unpredictable. While the company's strong revenue growth, strategic partnerships, and positive analyst predictions suggest a bullish outlook, the market's fear-driven sentiment and valuation concerns could lead to further price fluctuations.

In conclusion, Palantir's stock price has experienced a recent slump, with an analyst warning of a potential 20% drop. Investors should be cautious and consider the risks associated with tech stocks, as well as the company's strong fundamentals and growth prospects. As always, it's essential to do thorough research and consider your risk tolerance before making any investment decisions.