Palantir's stock is up more than 2,000% since the start of 2023, riding revenue growth of 71% over the past year and 11 straight quarters of accelerating sales.
And the stock is falling.
The pullback isn't about the business - it's about the math behind a 97x multiple, and whether the growth story can keep justifying it.
The pullback has almost nothing to do with how Palantir is performing. It has everything to do with what investors are willing to pay for that performance.
Shares trade at a forward price-to-earnings ratio above 97x - the stock price divided by what each share is expected to earn over the next year. For context, the S&P 500 sits around 22x.
At those levels, even a strong quarter can leave the stock flat, while a slightly softer one can send it lower. That's what the recent dip looks like.
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Strip out the valuation noise and the business is doing something rare. Eleven straight quarters of faster growth is not a streak you see often in software, let alone in a company already running at this scale.
Government contracts are a big piece of that. Palantir's work on defense programs - including the Golden Dome missile defense buildout - keeps adding to a pipeline that hasn't shown signs of slowing.
There's a more forgiving way to look at the price tag. Palantir's PEG ratio - which compares the P/E to the growth rate - sits at 0.51x.
A reading under 1 typically signals a stock is cheap relative to how fast it's growing, which means the 97x P/E starts to look less extreme.
Two things keep showing up in the bear case.
The first is insider selling. When founders and executives unload stock, it makes outside investors nervous - even when the sales are planned in advance.
The second is founder control. Palantir's leadership structure gives insiders outsized voting power, which limits what outside shareholders can push for if priorities shift.
Neither changes the revenue trajectory. Both shape how the market prices the stock.
The setup heading into the next earnings report is simple: growth has to keep accelerating. A flat or slowing quarter at a 97x multiple could turn this pullback into something bigger.
The next earnings report decides whether the streak is worth the price tag.
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