Ought to You Purchase Palantir Inventory Earlier than Dec. 13?

Palantir Applied sciences (PLTR 0.47%) has had an unimaginable run in 2024. The corporate has develop into some of the talked about platforms fueling the substitute intelligence (AI) narrative, shares of the inventory have gained greater than 300% this yr alone, and it is develop into a member of the S&P 500 index.

However with only a few weeks left within the yr, Palantir might need one final huge milestone achievement up its sleeve. Beneath, I will clarify why Dec. 13 is a vital date for Palantir traders. Let’s break down what traders must be looking out for and assess if the inventory is an effective purchase proper now.

What is going on on Dec. 13?

This yr, Dec. 13 falls on a Friday. And whereas Friday the thirteenth is normally affiliated with dangerous luck or superstition, Palantir traders might have some extra excellent news headed their means.

Subsequent Friday, the Nasdaq-100 index goes to be reconstituted. Which means that a brand new choice of firms can be added to the coveted index, changing shares which have fallen out of eligibility.

That is essential, as a result of the Nasdaq-100 is mostly affiliated progress shares and profitable alternatives past the S&P 500.

Picture supply: Getty Photos.

Will Palantir be a part of the Nasdaq-100?

On Sept. 6, Palantir introduced that it had formally earned entry into the S&P 500. For the reason that date of that announcement, shares of Palantir have soared by 138% as of market shut on Dec. 5.

Just a few months later, Palantir introduced that it was altering the inventory trade on which it trades — shifting from the New York Inventory Alternate (NYSE) to the Nasdaq.

PLTR information by YCharts

Since becoming a member of the Nasdaq on Nov. 26, shares of Palantir have gained about 10% (as of market shut Dec. 5). That is a fairly dramatic transfer in solely seven buying and selling days.

Within the press launch relating to this announcement, administration expressed that “upon transferring, Palantir anticipates assembly the eligibility necessities of the Nasdaq-100 Index.”

Whereas historical past isn’t any assure of future outcomes, the inventory’s efficiency following its entry into the S&P 500 and its transition to the Nasdaq function a good proxy for what traders might anticipate ought to the corporate earn a spot on the Nasdaq-100 on Dec. 13.

Does becoming a member of the Nasdaq-100 make Palantir inventory a purchase?

I feel there’s a good probability Palantir can be added to the Nasdaq-100 subsequent week and, ought to that happen, I might be shocked if the inventory would not transfer even larger. However whereas changing into a member of the Nasdaq-100 is a decent milestone, such an achievement alone doesn’t make Palantir inventory a purchase.

As an alternative, traders ought to have a look at a mixture of the corporate’s progress outlook, Wall Avenue’s tackle the corporate’s trajectory, and valuation.

So far as Palantir’s outlook and Wall Avenue’s opinion are involved, the corporate seems effectively on its method to proceed accelerating its prime line whereas rising margins and minting larger income over the subsequent a number of years.

The first catalyst fueling this progress is Palantir’s Synthetic Intelligence Platform (AIP), which has develop into a game-changing product growth for the corporate during the last couple of years. As such, a few of Wall Avenue’s most revered analysts together with Dan Ives of Wedbush Securities and Mariana Pérez Mora of Financial institution of America stay bullish on the inventory.

The one actual concern I’ve surrounding an funding in Palantir at its present worth comes right down to valuation. To place it bluntly, a price-to-sales (P/S) a number of of 63.5 and a ahead price-to-earnings (P/E) ratio of 149 usually are not even near affordable.

In my eyes, the inventory has run up a lot that it is due for a pullback sooner relatively than later. However with that mentioned, I see any potential sell-off as one which can be short-lived, as it should in all probability be pushed by traders taking income versus panic-induced promoting ought to Palantir face some kind of disaster — which, as of now, would not look probably.

Whereas the prospects of inclusion on the Nasdaq-100 is thrilling, it is actually simply one other potential milestone in what I see as a protracted line of extra accomplishments to be achieved for Palantir over a few years. All informed, I might encourage traders to observe Palantir and look to make use of a technique leveraging dollar-cost averaging over a long-term horizon.