Palantir Faces 2025 Downside as Valuation Remains Twice the Industry Average

Palantir Faces 2025 Downside: Jefferies Warns of Compression Risks for the Shares

Palantir stock could continue to decline in 2025 due to several compression risks, according to analysts at Jefferies on Monday. The stock still trades at 46 times enterprise value to the next twelve months’ revenue (EV/NTM rev), more than double the valuation of the next largest software company, despite a 15% year-to-date (YTD) fall in the company’s shares. The stock saw a 341% increase in 2024, which led to this valuation.

Insider Selling, AI Hype, and Interest Rates Pose Risks to Palantir Valuation

With CEO Alex Karp selling more than $2 billion worth of Palantir stock and other executives selling over $600 million in the last five months, Jefferies analysts observe that insider selling has been increasing. An overhang on the stock may result from the rise in insider selling via Rule 10b5-1 trading strategies. After expanding by 282% throughout 2024, Palantir’s EV/NTM revenue multiple contracted by 15% year-to-date, from 55 times to 46 times.

The last time we saw such high magnitudes of multiple expansion was during the Covid bubble when many of the high growth names saw their multiples significantly expand at the same time. However, we are now in a more normalized macro environment, and we think any negative factors (changing interest rates, AI hype turns, insider selling, etc) may cause PLTR’s multiple to further compress,

analysts led by Brent Thill

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