Jefferies analysts warn that Palantir Technologies (NASDAQ: PLTR) may face additional downside in 2025 due to risks of multiple compression, even after a 15% decline in its year-to-date (YTD) performance.

Key Factors Impacting Palantir’s Stock

Valuation Concerns

Palantir trades at 46 times enterprise value-to-next-twelve-months revenue (EV/NTM rev), over twice the valuation of the next highest software company.
This premium valuation follows a 341% rally in 2024, which analysts compare to the unsustainable “Covid bubble” period for high-growth stocks.

Insider Selling

Significant insider selling has been observed, with CEO Alex Karp offloading over $2 billion worth of shares and other executives selling $600 million in the last five months.
Insider sales through Rule 10b5-1 plans may act as an overhang on the stock, deterring new investors.

Multiple Contraction

Palantir’s EV/NTM revenue multiple has contracted by 15% YTD, down from 55x to 46x, following a 282% expansion in 2024.
Analysts predict that macroeconomic normalization, interest rate changes, reduced retail investor activity, or fading AI hype could lead to further compression.

Changing Shareholder Composition

Institutional ownership has increased by 5 percentage points to 32%, following Palantir’s inclusion in the Nasdaq 100 in December 2024.
This shift could reduce the retail-driven premium, adding to valuation risks.

Investment Outlook
Palantir’s 2025 performance hinges on balancing high valuation metrics with sustained growth and managing macroeconomic headwinds.
For a deeper understanding of Palantir’s financial trajectory:

Explore the Full Financials API for its income statements and balance sheet.
Use the Ratios (TTM) API to analyze its valuation, profitability, and leverage ratios.