How Palantir Stock Falls To $80
Let's be clear. Palantir's execution has been solid. Revenue growth over the most recent quarter improved to 48%, up from 27% in the year-ago quarter, while adjusted operating margins stood at 48%, up from 37% in the year-ago quarter. But that strength is exactly why the risk is also underappreciated. When expectations are sky-high, the fall can be pretty steep. Separately, Is Figma Stock Too Risky At $120?
Broader markets have rallied in recent months, but macroeconomic challenges remain, including lingering inflation, softening job numbers, and sizable import tariffs on key trading partners. Palantir's lofty valuation - roughly 255x forward earnings - makes it particularly vulnerable to a sharp pullback. Could the stock fall 50% to $80 per share or even lower? There's a real possibility. Palantir has seen steeper drawdowns in the past and those declines could easily repeat if sentiment turns. Of course, individual stocks tend to be more volatile than a diversified portfolio – so if you seek growth with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and delivered returns exceeding 91% since its inception.
Why Is It Relevant Now?
Palantir's revenue growth risks
Palantir has posted strong growth, particularly in its U.S. government segment, which saw revenue rise 53% year-over-year to $426 million over the last quarter. However, this momentum comes with risks. Government contracts tend to be lumpy and unpredictable, making future growth harder to forecast. Moreover, the new Trump administration is pursuing a strategy of de-escalating global tensions—including efforts to mediate between Ukraine and Russia and address the Israel-Palestine conflict.
While these initiatives support global stability, they could reduce demand for Palantir's software, which often sees higher uptake during periods of geopolitical uncertainty. With a heavy reliance on federal contracts, Palantir remains exposed to political risk as well. Shifts in government priorities, budget cuts, or contract losses could meaningfully impact its revenue trajectory and weigh on the stock.
Palantir's long-term growth depends on the commercial market, which the company caters to via its Foundry platform, which targets customers in industries including manufacturing, retail, and healthcare. While the commercial business has seen traction - with U.S. commercial sales almost doubling in the most recent quarter - there could be headwinds.
The company's ticket sizes are typically large, and implementation is also complex and expensive, meaning that the product may not scale as well with small and medium-sized firms. Scaling Foundry beyond large enterprises could require a different go-to-market approach - one that Palantir isn't built for today. This could impact growth in the longer-run.
How Resilient Is Palantir Stock In Downturns?
During periods of economic stress, Palantir has underperformed broader markets by a wide margin. Consider 2022: Palantir stock lost over 70% of its value within a few quarters - falling from $18.53 in January to $6.00 by December. By comparison, the S&P 500 declined about 25% over the same period. To its credit, Palantir fully recovered to its pre-crisis peak by July 2023, and since then, the stock has surged to a high of $160.66 as of early August 2025. But history shows that when sentiment shifts, PLTR stock can crater. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Palantir's High Valuation
Palantir Technologies' revenues have grown at an average annual rate of 24% over the past three years, well above the S&P 500's 5.2% growth. But even that impressive performance doesn't justify the stock's current valuation. Palantir trades at 90x FY'25 revenue and roughly 255x FY'25 earnings - multiples that leave little room for error. High-multiple growth stocks often falter during economic slowdowns, as lower earnings growth leads to sharp contractions in valuation multiples. In downturns, markets rotate toward safer value stocks, and Palantir clearly does not fit that mold. If the stock sees a correction near 2022 levels, it could fall to $80 per share or even lower.
Not too happy about the volatile nature of PLTR stock? The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
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