Palantir stock price has retreated and moved into a technical bear market after falling by 30% from its highest point last year. This retreat will be put to the test as the company publishes its financial results on Monday.

Palantir stock in the spotlight ahead of earnings

The PLTR stock price has crashed in the past few months as investors have dumped software companies amid fears that they will be disrupted by artificial intelligence tools by companies like OpenAI and Anthropic.

The company’s business will be put to the test later on Monday as it publishes its financial results, which will provide more color on whether its business is growing.

Its most recent results showed that its business was experiencing a strong growth momentum, helped by the US commercial business. This division grew by 137% in the fourth quarter as the customer count jumped by 49%. Its revenue rose to $507 million from $214 million in the same period last year.

American companies are leveraging Palantir’s products because of their quality and the fact that they can help them replace multiple software. 

At the same time, the US government has continued to spend on Palantir as geopolitical tensions rise. Chances are that its technology is being used widely in the ongoing Iran war. 

The US government is now seeking $1.5 trillion in defense spending, with substantial sums going to AI tools, especially those made by Palantir. Its US government revenue jumped to $570 million from $343 million.

Wall Street analysts are highly bullish on Palantir ahead of its earnings, with the average revenue estimate being $1.54 billion, up by 74% from the same period last year. Its guidance will show that its revenue will rise by 66% YoY to $1.68 billion.

The annual revenue is expected to grow by 62% YoY to over $7.28 billion. These numbers will make it one of the fastest-growing companies in the industry. 

Most notably, the company has a long track record of beating analysts’ estimates. As a result, the beating itself will not be a big deal, with investors looking for the magnitude of the outperformance.

Another notable thing is that its valuation, while large, has become much better than it was a few months ago. It has a forward price-to-earnings ratio of 108 and a forward PEG ratio of 2.29. Its forward PE ratio was nearly 200 last year.

Palantir has one to the best Rule-of-40 multiple, thanks to its strong revenue growth and its margins. Its forward revenue growth is 56%/, while its net profit margin is 36%, giving it a multiple of 92%.

Palantir stock price technical analysis

PLTR stock price chart | Source: TradingView  The daily timeframe chart shows that the PLTR stock price formed a double-bottom pattern at $125.7 and a neckline at $162. A double-bottom is one of the most common bullish reversal signs in technical analysis.

The stock has moved above the 50-day Exponential Moving Average (EMA), while the Supertrend indicator has flipped from red to green, a sign that bulls are gaining momentum.

Therefore, the stock will likely continue rising, potentially to the key resistance level at $162.5. A move above that level will point to more gains, potentially to $180.

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