Why Is PLTR Stock Dropping and What's Next

PLTR stock has been experiencing a significant drop, leaving many investors wondering what's behind this decline. The company's quarterly earnings report revealed a net loss of $170 million, which is a major red flag.

As we dive into the reasons behind this drop, it's essential to consider the company's revenue growth. According to the report, PLTR's revenue decreased by 13% compared to the same quarter last year, reaching $164 million.

This decline in revenue is a significant concern for investors, as it indicates a potential slowdown in the company's growth. The report also highlighted a decrease in the company's active users, which further exacerbates the issue.

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Palantir's stock has been on a wild ride, more than doubling in value in 2025, making it the best-performing stock in the S&P 500 for the year so far.

The company's Artificial Intelligence Platform has driven record sales, but some analysts are sounding the alarm on its valuation. Short seller Andrew Left of Citron Research believes the stock has become "detached from fundamentals" and would be worth $40 if it traded at the same price-to-revenue multiple as OpenAI.

Palantir's stock price has fallen over 9% in the fifth straight day of declines, closing just under $158. Despite this, the company's strong revenue growth and outlook have earned it a "buy" recommendation from just two of the eight Wall Street analysts surveyed by Visible Alpha.

Jefferies analysts still believe the stock's valuation is "disconnected from even optimistic growth scenarios", while HSBC analysts have a neutral rating for the stock, warning it might already be "priced for perfection" and could struggle to keep up with investors' high expectations.

Here are the current ratings from the Wall Street analysts:

Palantir's reliance on defense contracts is also a concern, as the Donald Trump administration plans to slash defense spending, which could impact the company's future growth. Additionally, insider selling plans, such as CEO Alex Karp's plan to offload up to $1.2 billion worth of shares, are unsettling investors and leading to weakened sentiment.

Wall Street is divided on PLTR stock, with some analysts warning of an impending crash while others see the company as a leader in the AI segment.

Palantir's valuation has been a major concern, with short seller Andrew Left of Citron Research estimating the stock's price would be closer to $40 if it traded at the same price-to-revenue multiple as OpenAI.

Some analysts, like Jefferies, expect the stock to drop to $60, citing its high valuation. Jefferies analyst Brent Thill also flagged slowing hiring growth as a significant concern, suggesting it could indicate limited AI opportunities or over-hiring in previous years.

Palantir's revenue growth is also an area of concern, with international revenue stagnating at 14% growth, while U.S. revenue surged 38% year-over-year in 2024.

Analysts are divided on the company's ability to scale globally, with some warning it may struggle to keep up with investors' high expectations.

Here's a breakdown of some analysts' views on PLTR:

Wedbush Securities analyst Dan Ives has a dissenting opinion, labeling Palantir the 'Messi of AI' and dismissing overvaluation concerns.