We Note Insider Selling On 10b5-1 Plans Has Rapidly Picked Up, With The CEO Selling Nearly $2B In Stock Over The Last 3 Months And Over $1B In The Last 2 Weeks

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Palantir (NYSE: PLTR), an AI-powered Software-as-a-Service (SaaS) provider that allows companies and government agencies to gather and analyze reams of data, has been on a tear lately, benefiting not only from the secular AI-related tailwind but also from the incoming Trump presidency and its America-first agenda, which is likely to bolster providers of home-grown AI solutions. Yet, Wall Street appears less enthusiastic about Palantir’s immediate prospects. Consider the latest investment note from Jefferies.

For the benefit of those who might not be aware, Palantir’s financials are as strong as ever. In the just-concluded third quarter, the company brought in $725 million in revenue, beating Wall Street’s consensus estimate by 3.1 percent. This number also meant that Palantir’s revenue grew at an annual rate of 30 percent. This aligns with Palantir’s earlier commitment that it would deliver annual revenue growth of at least 30 percent through 2025.

Yet, Wall Street is still concerned, particularly in relation to the stock’s meteoric rise. For instance, Jefferies noted today:

“PLTR is trading at an unsustainable multiple, and insider selling is backing that up. PLTR is up 257% YTD on multiple expansion.”

The analyst went on to note:

“PLTR trades at 43x CY25 revenue, well over 2x the next highest software name.”

Jefferies analyst Brent Thill also flagged waning retail interest, with retail ownership declining by 7 points to just 42 percent in the aftermath of Palantir’s inclusion in the S&P 500 index.

On the flip side, “index/active institutional ownership has increased 4pts/3pts to 25%/27%.” Thill believes this shift might reduce Palantir’s “retail premium” going forward.

Also, Thill is particularly concerned about the quantum of insider sales:

“We note insider selling on 10b5-1 plans has rapidly picked up with the CEO selling nearly $2B in stock over last 3 months & >$1B over last 2 weeks.”

Accordingly, Thill has pegged an ‘Underperform’ rating on the stock with a stock price target of $28 per share, flagging the stock’s “unsustainable premium.” For reference, the stock is currently trading at the $61 handle.