The stock of Palantir Technologies (PLTR, Financial) fell 3% on early trading on Tuesday after Cathie Wood-Ark Invest sold $15 million worth of Palantir shares, or 196,728 shares in total, across various ETFs. However, the question that arises with this move is whether the company is overvalued and how that could affect its prospects, which increased 355% in the last year.
Wood, however, is not a stranger to technology disruptors, but her flip from supporting Amazon (AMZN, Financial) to Palantir has been, in part, an indictment of the super-overvalued company's near monopoly on the U.S. government contract and commercial markets. After Morgan Stanley corrected its price target for Palantir to $60, a slap in the face to the stock's inflated price, which had spiked in recent months, the sale comes.
That's time for mixed technical indicators at Palantir. Shorter term averages, such as the 20-day SMA ($76.28) and the eight-day SMA ($77.62), are currently bearish, but while the 200-day simple moving average (SMA) remains bullish at $37.69 with the market still above it. On top of this, the Moving Average Convergence Divergence (MACD) of 3.16 has some bullish momentum, while the Relative Strength Index (RSI) of 54.77 implies a neutral view among investors.
CNBC's Jim Cramer has revealed that he is interested in Palantir to his portfolio, trying to be contrarian from the bearish sentiment in the market. Now at a crossroads between long-term momentum and the short-term risks that such a polarizing valuation presents, Palantir is as risky as its investor base.
