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Palantir and Tesla are down 30%. Time to buy?

February 24, 2025

Palantir and Tesla are down 30%. Time to buy?

Not no, but hell no. The two companies are significantly overpriced and should continue coming down significantly in price in the next 12 months. Be patient and wait for them to fall 50% and 40%, respectively, before considering adding them to your portfolio.

Palantir Technologies

As of February 24, 2025, Palantir Technologies Inc. (PLTR) has experienced a notable decline from its all-time intraday high, which was on just six days ago, on February 18, 2025 when PLTR shares rose intraday to $125.41 and the company registered a market capitalization of approximately $271.45 billion. In just six days, Palantir has lost about 28% from its AI bubblicious valuation, with shares trading at $90.68 with a market cap of approximately $212.68 billion. Although PLTR has lost almost $60 billion in value in just 6 days, it is still trading at a price to earnings ratio of 481. 

PLTR's downturn is primarily attributed to concerns over potential U.S. defense spending cuts, which could impact Palantir's government contracts, its primary income source. Recent stock sales by CEO Alex Karp also influenced investor sentiment, and implicitly invited others to take some profits off the table.  Despite the recent decline of about 28%, Palantir's stock has seen substantial growth over the past year, and is still up almost 290% in 12 months. We assume that PLTR will continue deflating and that share prices will continue falling significantly in the next 12 months. PLTR is a good company with good products. However, we would not get near its stock until the company sheds about 50% of its current valuation. When shares drop below $50 and valuation below $100 billion, it may be a good time to revisit buying PLTR shares.

Tesla, Inc. 

As of February 24, 2025, Tesla Inc. (TSLA) is trading at $330.53 per share. The stock reached its all-time intraday high of $488.54 on December 18, 2024. This represents a decline of $158.01 per share, or approximately 32.3%, from its peak.

Regarding market capitalization, Tesla surpassed the $1 trillion mark in October 2021. At its peak in December 2024, the company's market cap was approximately $1.5 trillion. With the current share price, Tesla's market capitalization stands at around $1.09 trillion, reflecting a decrease of about $410 billion, or 27.3%, from its peak valuation.

These figures highlight the volatility inherent in Tesla's stock performance over recent months. Just like in the case of Palantir, our assumption is that Tesla is significantly overpriced and has been riding an AI bubble based on Elon Musk's promises about robo taxis and AI robotic assistants. We may be wrong, but we think that Elon is bluffing and fooling investors. We would not consider buying a long position on Tesla until share prices get below $200. We are currently holding a short position on the stock.

In sum, both Palantir and Tesla are good companies, but their shares are significantly overpriced. Palantir should come down 50% and Tesla 40% trading at around $45 and $200, respectively, for them to represent potential buying opportunities. In the meantime, the best approach is to ignore the stocks or see them continue falling into an apparent abyss from unwarranted bubblicious heights. 

Now you know it. 

www.creatix.one  


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