Analysis of Palantir (PLTR) Stock Decline: Army Contract Renewal Concerns Raised by Analyst

Palantir Technologies (PLTR) is facing new challenges in 2023 as a bearish analyst raises questions about its Army contract renewal impacting the stock.


Concerns over Palantir’s renewal contract with the U.S. Army have been expressed by William Blair analyst Louie DiPalma, who rates PLTR stock underperform. He suggested that the renewal contract for a four-year, $458 million deal might be less than the original amount after a recent U.S. Army presentation.

According to DiPalma, the Army could possibly offer a new two-year renewal for $116 million, with additional vendors sharing the deal, reducing Palantir’s revenue.

The William Blair analyst further speculated on potential issues related to data ownership between Palantir and the Army, citing the company’s aim to use customer data to train artificial intelligence models.

PLTR Stock: Impact of Government Contracts

Palantir’s stock experience a minor increase after the release of DiPalma’s note, however, it fell 8.3% on Friday. The stock market overall saw a downturn, impacting Palantir stock and other software stocks following November’s significant gains.

Barron’s published an article today expressing potential negative impact to PLTR stock from the William Blair note.

Government agencies are a major source of revenue for Palantir, accounting for nearly 60% of their revenue. They utilize the company’s data analytics software for various purposes such as intelligence gathering, counterterrorism, and military operations.

Although PLTR stock peaked on Nov. 21, it suffered a decline due to the disappointing size of an anticipated United Kingdom contract. Despite the recent retreat, PLTR stock shows a 190% increase for 2023.

Moreover, Palantir has expanded its presence in the healthcare, energy, and manufacturing sectors.

Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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