Last Friday, Palantir (NYSE:PLTR) rose by 25% after spending months stuck in a trading range. The stock took out its previous high and is gaining steam again. Why?
Markets are betting that Palantir’s small-sized contracts with the government will get bigger. It is building a positive reputation for helping companies save money at a low cost. As other software firms lose market share to Palantir, investors are anticipating accelerated revenue growth ahead.
PLTR stock does not trade at a low valuation. Its ~$57 billion market capitalization and meaningless price-to-earnings are not scaring buyers. So long as the beaten-down stocks like Gamestop (NYSE:GME) or AMC Entertainment (NYSE:AMC) squeeze bears, PLTR stock could rise.
The short float on the stock is a modest 8.8% but Demo Day for its Foundry and Gotham software platforms could help shareholders. When the market is not questioning financial instruments like SPACs, knowing what Palantir does only attracts more stock buyers. The chances are also high that the company will post impressive revenue growth in the next quarterly earnings report. Management may hint at bigger contracts with the health and military segments of the government.
With revenue growth expanding briskly, a one-day rise in PLTR stock could become the norm. Shareholders should continue holding the stock.
