A Jefferies analyst thinks Palantir’s large base of retail-investor support ‘is a double-edged sword’
Palantir reported upbeat earnings earlier this week.
Palantir Technologies Inc.’s stock has drawn a number of downgrades this year, with skeptics arguing that the enterprise-software name carries an expensive valuation.
So far, that concern hasn’t dampened Palantir’s stock momentum, however, with shares closing at a fresh record Wednesday, up 234% on the year to rank second in the S&P 500 for the year.
But Jefferies analyst Brent Thill is the latest analyst to weigh in with a fresh bearish view, downgrading the stock to underperform from hold on what he deems an “unsustainable valuation.”
Palantir is the most expensive stock in software, Thill wrote, with its valuation multiple more than double that of the No. 2 name, CrowdStrike Holdings Inc. That’s with Palantir shares valued at 38 times revenue for calendar 2025.
“We believe fundamentals are alive, but [Palantir] would have to [accelerate] growth to 40% for four years straight,” and trade at a multiple of 12 times estimated 2028 revenue, “just to hold its stock price, which seems unlikely,” Thill added.
He sees other risks as well, including that the stock has a fervent base of retail support, with perhaps half of shares owned by retail investors.
“This shareholder structure is a double-edged sword in that while a bigger retail base could further fuel multiple expansion on no news/change to fundamentals, these dynamics could also cause very quick and significant multiple compression should the stock go out of favor,” he wrote.
Indeed, Palantir’s stock is bucking the downgrade, up about 0.6% on Thursday.
Thill also sees Palantir executives and other insiders ramping their share sales through trading plans.
He said he and his team “give credit where credit is due” in the wake of Palantir’s multiquarter stretch of accelerating growth. “We underestimated the momentum that [Palantir] was able to garner after the launch of Artificial Intelligence Platform (AIP) boot camps,” he wrote.
At the same time, he worries about tougher comparisons going forward, which could make future growth acceleration more difficult.
Of the 22 analysts tracked by FactSet who follow Palantir’s stock, seven now have sell-equivalent ratings, while five have buy ratings and 10 have hold ratings.
Analysts at Mizuho and Monness, Crespi, Hardt & Co. also downgraded Palantir’s stock earlier this year on valuation fears.