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

Palantir Applied sciences (PLTR 6.22%) has had an unbelievable run in 2024. The corporate has grow to be some of the talked about platforms fueling the substitute intelligence (AI) narrative, shares of the inventory have gained greater than 300% this 12 months alone, and it is grow to be a member of the S&P 500 index.

However with just some weeks left within the 12 months, 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 efficient purchase proper now.

What is going on on Dec. 13?

This 12 months, Dec. 13 falls on a Friday. And whereas Friday the thirteenth is normally affiliated with unhealthy luck or superstition, Palantir traders might have some extra excellent news headed their approach.

Subsequent Friday, the Nasdaq-100 index goes to be reconstituted. Which means that a brand new collection of firms will likely 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 usually affiliated development shares and profitable alternatives past the S&P 500.

Picture supply: Getty Pictures.

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. Because the date of that announcement, shares of Palantir have soared by 138% as of market shut on Dec. 5.

A couple of months later, Palantir introduced that it was altering the inventory change on which it trades — transferring from the New York Inventory Trade (NYSE) to the Nasdaq.

PLTR knowledge 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 may 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 believe there’s a good likelihood Palantir will likely be added to the Nasdaq-100 subsequent week and, ought to that happen, I would be shocked if the inventory does 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 take a look at a mix of the corporate’s development 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 nicely on its strategy to proceed accelerating its prime line whereas rising margins and minting larger earnings over the following a number of years.

The first catalyst fueling this development is Palantir’s Synthetic Intelligence Platform (AIP), which has grow to be a game-changing product improvement 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 value comes all the way 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 aren’t even near affordable.

In my eyes, the inventory has run up a lot that it is due for a pullback sooner somewhat than later. However with that mentioned, I see any potential sell-off as one which will likely be short-lived, as it is going to most likely be pushed by traders taking earnings versus panic-induced promoting ought to Palantir face some type of disaster — which, as of now, does 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 an extended line of extra accomplishments to be achieved for Palantir over a few years. All instructed, I would encourage traders to observe Palantir and look to make use of a method leveraging dollar-cost averaging over a long-term horizon.