Palantir Technologies(NASDAQ: PLTR) has had an incredible run in 2024. The company has become one of the most talked about platforms fueling the artificial intelligence (AI) narrative, shares of the stock have gained more than 300% this year alone, and it’s become a member of the S&P 500 index.
But with just a few weeks left in the year, Palantir might have one last big milestone achievement up its sleeve. Below, I’m going to explain why Dec. 13 is an important date for Palantir investors. Let’s break down what investors should be on the lookout for and assess if the stock is a good buy right now.
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This year, Dec. 13 falls on a Friday. And while Friday the 13th is usually affiliated with bad luck or superstition, Palantir investors may have some more good news headed their way.
Next Friday, the Nasdaq-100 index is going to be reconstituted. This means that a new selection of companies will be added to the coveted index, replacing stocks that have fallen out of eligibility.
This is important, because the Nasdaq-100 is generally affiliated growth stocks and lucrative opportunities beyond the S&P 500.
Image source: Getty Images.
On Sept. 6, Palantir announced that it had officially earned entry into the S&P 500. Since the date of that announcement, shares of Palantir have soared by 138% as of market close on Dec. 5.
Since joining the Nasdaq on Nov. 26, shares of Palantir have gained about 10% (as of market close Dec. 5). That’s a pretty dramatic move in only seven trading days.
In the press release regarding this announcement, management expressed that “upon transferring, Palantir anticipates meeting the eligibility requirements of the Nasdaq-100 Index.”
While history is no guarantee of future results, the stock’s performance following its entry into the S&P 500 and its transition to the Nasdaq serve as a decent proxy for what investors could expect should the company earn a spot on the Nasdaq-100 on Dec. 13.
I think there is a good chance Palantir will be added to the Nasdaq-100 next week and, should that occur, I’d be shocked if the stock doesn’t move even higher. But while becoming a member of the Nasdaq-100 is a respectable milestone, such an achievement alone does not make Palantir stock a buy.
Instead, investors should look at a combination of the company’s growth outlook, Wall Street’s take on the company’s trajectory, and valuation.
As far as Palantir’s outlook and Wall Street’s opinion are concerned, the company appears well on its way to continue accelerating its top line while growing margins and minting higher profits over the next several years.
The primary catalyst fueling this growth is Palantir’s Artificial Intelligence Platform (AIP), which has become a game-changing product development for the company over the last couple of years. As such, some of Wall Street’s most respected analysts including Dan Ives of Wedbush Securities and Mariana Pérez Mora of Bank of America remain bullish on the stock.
The only real concern I have surrounding an investment in Palantir at its current price comes down to valuation. To put it bluntly, a price-to-sales (P/S) multiple of 63.5 and a forward price-to-earnings (P/E) ratio of 149 are not even close to reasonable.
In my eyes, the stock has run up so much that it’s due for a pullback sooner rather than later. But with that said, I see any potential sell-off as one that will be short-lived, as it will probably be driven by investors taking profits as opposed to panic-induced selling should Palantir face some sort of crisis — which, as of now, doesn’t look likely.
While the prospects of inclusion on the Nasdaq-100 is exciting, it’s really just another potential milestone in what I see as a long line of more accomplishments to be achieved for Palantir over many years. All told, I’d encourage investors to monitor Palantir and look to use a strategy leveraging dollar-cost averaging over a long-term horizon.
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Bank of America is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Bank of America and Palantir Technologies. The Motley Fool has a disclosure policy.
