Why Palantir Stock Keeps Crashing: 3 Brutal Truths Behind the Bloodbath

Palantir's stock just can't catch a break—another brutal session sends shareholders scrambling for exits.

What's driving the relentless selling pressure?

Growth metrics miss the mark—again. Revenue projections look softer than Wall Street's morning latte. And let's be real: the market's patience for 'potential' wears thinner than a crypto trader's margin.

Institutional investors bail. Big funds rotate out of speculative tech plays faster than you can say 'overvalued.' Retail traders? Left holding the bag—as usual.

Competition heats up. Newer analytics firms eat into Palantir's moat with cheaper, nimbler solutions. Legacy contracts? Not enough to sustain the fantasy.

Here's the kicker: until Palantir proves it can monetize AI hype into actual dollars, this slide might just be the new normal. But hey—at least the stock's cheaper now, right? Perfect for masochists and 'discount' hunters.

Image source: Getty Images.

Palantir stock is coming back to earth

Palantir's software helps enterprises and government agencies integrate, manage, and analyze large amounts of data. Growth from both the government and commercial sectors has investors excited about its long-term potential.

But the stock has gotten far ahead of the business, and Palantir is now caught up in a broader rotation away from AI-related stocks as valuations soar. While high-growth stocks often warrant higher valuations, Palantir has stood out among them.

Business has been booming, and co-founder and CEO Alex Karp called the second quarter a "phenomenal quarter." He added, "We are guiding to the highest sequential quarterly revenue growth in our company's history, representing 50% year-over-year growth."

While that growth is rapid, investors had already bid the stock higher than it deserved. A forward price-to-sales (P/S) ratio of almost 90 means it WOULD require many years of that level of growth to justify anything close to that valuation. By comparison, AI leaderhas a forward P/S of about 20.

Investors looking to add Palantir as a long-term holding might very well still find a better price in the future. A strategy to make incremental purchases or to buy in thirds is probably the best approach with this high-flying stock.