Investing.com – Palantir (NASDAQ:) stock could face further downside in 2025 amid multiple stress risks, Jefferies analysts said Monday.
The company's shares are down 15% year-to-date, yet the stock still trades at 46 times enterprise value to next-twelve-month revenue (EV/NTM rev), which is more than double the valuation of the company's second-highest software. This valuation comes after the stock sees a 341% rise in 2024.
Jefferies analysts note that insider selling is on the rise, with CEO Alex Karp selling more than $2 billion worth of Palantir stock and other executives selling more than $600 million in the past five months. An increase in insider selling through Rule 10b5-1 trading plans would likely cause a drag on the stock.
Palantir has seen its EV/NTM revenue multiple contract 15% year-to-date, falling from 55x to 46x, following a 282% expansion in multiples through 2024.
“The last time we saw such a large amount of multiple expansion was during the Covid bubble when several high-growth names saw significant expansion in their multiples at the same time,” analysts led by Thiel said in a note.
“However, we are now in a more normal macro environment, and we believe that any negative factors (changing interest rates, AI hype shifts, insider selling, etc.) may cause further pressure on the PLTR multiple,” they added.
Analysts also note that the composition of Palantir's shareholder base has changed recently, with active institutional ownership increasing by five percentage points to 32% following the company's December 23, 2024 listing. This change, according to analysts, could reduce the retail premium going forward.
Jefferies reiterated an Underperform rating on Palantir stock and a $28 price target, implying a downside potential of more than 56% from the last closing price.
