Investors have bailed on Palantir Technologies Inc (NASDAQ: PLTR) in recent days following reports that the Trump administration is considering trimming the US defense budget.
But the country’s political figures have been doing the polar opposite – at least four of them have recently disclosed stakes in the big data analytics firm, signalling confidence in its long-term prospects.
PLTR shares have lost a total of more than 30% since February 19th.
US Congressmen who have bought Palantir stock
Rep. Majorie Taylor Greene has recently loaded up on shares of Palantir Technologies.
In total, the Congresswoman spent up to $15,000 to buy PLTR shares on February 12. Rep. Taylor has invested in Nvidia stock this month as well.
A day earlier, on February 11, congressional representatives Gilbert Ray Cisneros Jr. and James Comer also disclosed a stake worth up to $15,000 each in Palantir stock.
Finally, recently elected representative of Texas’s 32nd congressional district, Julie Johnson, has parked as much as $15,000 in Palantir stock as well.
Investors should note, however, that these US politicians made their moves before the plunge in Palantir stock.
So, their investment decisions couldn’t have been aimed at capitalising on the recent weakness in PLTR.
Why may DoD budget cuts be significant for PLTR?
If the new US government does indeed proceed with lowering its defense spending, it could prove to be a significant headwind for Palantir.
Why? Because the Denver headquartered firm generates more than 40% of its revenue from government contracts.
So, cutting costs on that front could weigh on a significant source of PLTR’s revenue.
Still, Dan Ives – a senior Wedbush Securities analyst remains bullish on Palantir stock as the DoD budget cuts could actually prove to be a tailwind for it.
“Palantir’s unique software approach will enable the company to gain more IT budget dollars at the Pentagon … not less, despite these initial knee-jerk reactions from the Street,” he told clients in a research note last week.
Despite today’s decline, Palantir shares are up a dozen-fold versus their all-time low.
Palantir Q4 earnings snapshot
Before the Pentagon news, Palantir shares were trading at record levels, partially related to the company’s solid earnings release on February 3.
PLTR earned 14 cents a share on $828 million in revenue in the quarter ended December. Analysts, in comparison, were at 11 cents per share and $776 million, respectively. At the time, the company’s chief executive Alex Karp told investors:
“Our business results continue to astound, demonstrating our deepening position at the centre of the AI revolution.”
Palantir stock may be worth owning at current levels as its management issued strong guidance for the full year in early February. The defense stock does not currently pay a dividend, though.
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