Update May 3: Palantir Technologies Inc (NYSE: PLTR) remains under immense pressure – falling for the fifth consecutive day nd kicking the new month with a downfall. The adage “Sell in May and go away” rings true for the company run by Alex Karp, who is somewhat personally responsible for the recent downfall. Karp’s share-sale has been seen as a classic case of insider dumping of equity, which does not bode well for the firm. Critical support awaits at $21.78.
At least someone’s making money.
Reuters broke the news this morning that Palantir CEO Alex Karp took home $1.1 billion in compensation in 2020 for taking his company public last year. The company he co-founded has never turned a profit in 18 years of existence.
The $797.9 million in options and $296.4 million in stock awards are at least partly due to PLTR’s meteoric rise. After a direct listing circa $10 a share last fall, the big data outfit exploded on investor euphoria up to $45 in January before gradually dropping down to what appears to be a wide support zone between $21 and $27.50.
Shares of Palantir closed down 2% Thursday at $23.37.
PLTR was co-founded by legendary Silicon Valley investor Peter Thiel. The firm is a data mining and analytics technology company that aids companies and governments integrate and analyse their various diverse data sets to help make sense of complicated data.
Though retail investors and star stock pickers like Cathie Wood have continued to expect big things from the stock, company insiders like Karp having been on a share-selling spree since the post-IPO lockup period ended in February. Just last week, Karp offloaded another $42.1 million worth of shares.
It would appear this insider selling would need to end before shares gain a reprieve to move higher anytime soon.
One reason Karp’s gigantic compensation package may irk shareholders is that stock-based compensation is one of the primary obstacles to profitability. In the first half of 2020, the company lost close to $165 million. But without stock-based compensation, the company could have generated a slim net profit.
PLTR stock price: Descending triangle to be tested
Besides the weight of insider selling, however, downgrades by Credit Suisse, Morgan Stanley and Citigroup in recent months seemed to have dimmed the hopes of some early optimists.
A recent upgrade to buy by Goldman Sachs with a price target of $34 gave some renewed vigour, but the consensus estimate still has an average price target of $26.33, just 12.6% above the current price.
Of course, any stock that experiences a 47% jump in revenue in the previous fiscal year is likely to keep many investors interested.
Palantir shares have fluctuated within a descending triangle since late January. The lower support of the triangle sits at $21.20, and the current price is nearing the triangle’s pinnacle, a make or break level where traders will expect either a break above the downtrend resistance or rejection that would keep the stock under the current bearish pattern.
On the daily chart, PLTR is straddled by the 20-day Simple Moving Average (SMA), which is sitting just below at $23.30, and the 50-day SMA at $24.07.This tight pairing places more emphasis on expectations that PLTR shares are set to make a move soon.
PLTR 1-day chart
If Palantir breaks above the descending triangle’s upper limit, the next resistance level is the April high of $27.50.
If the stock, however, falls below the triangle’s baseline, the next support to watch for is the $20.19 monthly low.
If shares decide not to make any serious move after the triangle closes its jaws, then the market will look ahead to Tuesday, May 11 for the company’s Q1 2021 earnings results. Palantir is forecasting a full fiscal year 2021 revenue growth of 30%.
Update May 3: Palantir Technologies Inc (NYSE: PLTR) extended its falls on Friday, falling another 1.41% to $23.04. Shares of the Denver-based technology company suffered four consecutive days of falls, paring hard-fought gains recorded earlier in April. Is it “Sell in May and go away” for PLTR? Insider selling and the CEO’s pay package could haunt the firm, while optimism about is prospects and improving public image could keep the equity bid.