Why Bulls Should Want a Bigger Drop in Palantir Stock

Palantir Technologies Inc. (NASDAQ: PLTR) has been one of the best-performing technology stocks in 2025, up nearly 151% year-to-date and up more than 215% in the last 12 months.

But after such a dramatic rally, investors face a familiar question: chase the momentum or wait for a better entry?

For long-term investors, now may be the time to exercise patience rather than panic buying.

Despite a minor drop of around 14.5% in the first week of November, the stock is still trading at over 25x forward sales, a valuation that leaves little margin for error.

A deep pullback into the $170-$180 range would reset expectations and offer long-term buy-and-hold investors a better entry point. 

The Floor Continues to Rise for PLTR Stock

The PLTR stock chart tells a story of consistent institutional accumulation. Earlier this year, PLTR established a base near $145, broke higher, and settled into a new support zone around $170. Following the latest rally, the stock now appears to be testing $190 as a potential new floor.

That kind of pattern, marked by higher highs and higher lows, is the hallmark of a healthy uptrend. It reflects investor confidence that each pullback is a buying opportunity.

For traders, a successful bounce from the $190 level would confirm strong support. A decisive break below $185, however, could open the door for a deeper correction toward $170. This is an area that long-term investors might hope for, as it would reset expectations and improve the risk/reward profile.

The analyst forecasts for this stock have a consensus price target of $173.45. This has gone up sharply from where it was just 12 months ago, reflecting the impact of institutional buying, which increased after PLTR stock was added to the S&P 500 and NASDAQ 100 lists.

It is also evidence of the company’s performance, which serves as the scoreboard for many stocks. Many analysts believe that Palantir could double again in the next five years.

Why Palantir Still Belongs in a Long-Term Portfolio

Due to concerns about the stock’s valuation, Palantir came into its third-quarter earnings report with an exceptionally high bar to clear. But it did just that, posting year-over-year (YOY) beats in both revenue and earnings. 

These weren’t small beats either. Revenue in the United States, where Palantir gets most of its business, was up 77% YOY. Earnings per share were up over 100%. The company also posted an unprecedented Rule of 40 score of 114, combining revenue growth and profit margin—a rare feat in the tech sector.

Consensus estimates now expect 40% revenue growth over the next two years, with profitability improving each quarter. Palantir is showing strong momentum across both its government and commercial divisions, suggesting a more diversified and durable growth profile.

Traders Continue to Put Up Bearish Hedges

No matter how high the stock goes, Palantir has proven to be difficult to short. Only about 2.3% of the stock’s float is sold short. However, that doesn’t mean that traders aren’t hedging against downside risk. The Palantir options chain for Nov. 21 shows an increase in put volume at the $180 and $190 strikes.

Implied volatility for those strikes is around 55%-57%, indicating an expectation of near-term price swings. Still, open interest in $190 and $200 calls shows that many traders believe another leg higher could come after a period of consolidation.

The takeaway for traders is that overall sentiment remains bullish, but traders are clearly expecting more near-term volatility before PLTR stock surges higher.  

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The article "Why Bulls Should Want a Bigger Drop in Palantir Stock" first appeared on MarketBeat.