Palantir Bull Unfazed by 16% Stock Slump From All-Time High: Options Chatter

Not even $Palantir (PLTR.US)$’s 16% slump from an all-time high is enough to deter a bull from expressing his or her conviction through the options market.

At 11:47:14 a.m. in New York Thursday, an active seller collected a $7.61 million premium for issuing put options that give their holder the right to sell 250,000 Palantir shares at $165 each in the next 308 days.

That single-leg transaction could be profitable for the seller should Palantir’s shares stay above that strike price until Sept. 18, 2026, allowing those put options to expire worthless. The unusual options trade of 2,500 contracts is about 3.6X the open interest. Each contract covers 100 shares.

(To see Palantir's options chain, click here. For the rest of the unusual options activities, click here.)

The stock of the company that supplies artificial intelligence (AI) software has fallen from its peak reached just 10 days ago amid intensifying debate over soaring valuation. After a 2,610% surge since the end of 2022, the stock is now trading at 66X next year’s estimated sales, much pricier than $NVIDIA (NVDA.US)$’s 16X.

“We are observing a new trend where Palantir’s valuation multiple limits market enthusiasm, despite the company’s rapid growth trajectory,” Morningstar analyst Mark Giarelli wrote in a note on Nov. 3. “We believe Palantir and its ontological framework are leaders in artificial intelligence, but it faces a valuation barrier.”

(For Palantir's financial data, see the earnings hub here.)

The stock rally faltered as the tech-heavy $Nasdaq Composite Index (.IXIC.US)$ fell more than 4% from its all-time high amid mounting concerns over a potential AI bubble. Stock market jitters turned the spotlight on Palantir’s soaring valuation, a trend that stayed largely ignored by the bulls who were focused on accelerating revenue growth.

This year, analysts, on average, expect Palantir to post a 53% growth in revenue, almost twice as fast as the expansion last year.

“Our analysis of previous technological innovators, dating back to the 1970s, shows it is rare for a company to justify this valuation,” Morningstar’s Giarelli said. “Palantir may defy the odds, given its top-of-class automated decisioning technologies, but it must grow (and then some) for investors to earn a return from current prices.”

Only 31% of the analysts who cover the stock have a “buy” recommendation on Palantir and more than half say “hold,” according to data compiled by Bloomberg.

Share your thoughts on Palantir. Do you see Palantir rebounding from its recent slump to resume its climb toward a new record this year? Let your voice be heard by voting below. And if you want to read more options columns like this one on AMD, or this one on Palantir, follow me here, where you can also find my earnings stories on some of the biggest stocks.

Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.

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