By Elsa Ohlen

Palantir stock just had its worst four-day stretch since 2022 but now looks to break its losing streak.

Investors have been fretting about U.S. government spending cuts that could impact the data analytics and military contractor firm's bottom line.

Shares were up 1.5% to $92.00 in premarket trading Tuesday, after a 11% drop Monday.

By Monday's close, shares had fallen 27% over the past four days, down from a record high of $124.62 on Feb. 18. That's the stock's worst four-day performance since May 2022 when it fell 34% after a weak earnings report, according to Dow Jones Market Data.

Shares would have to drop 16% Tuesday to surpass its worst five-day performance since the company went public in September 2020.

The drop comes amid a broad defense stock selloff after news last week that the Trump administration could cut military spending. That may affect Palantir which provides software and artificial intelligence solutions to the Department of Defense.

In 2024, 55% of Palantir's revenue came from customers in the government segment.

In its latest annual report, Palantir identified a significant "decline in overall U.S. government spending" or "shift in spending priorities" as a potential risk to future revenue and growth prospects.

Despite the decline in recent days, the shares are still up 20% so far in 2025, through Monday's close. They are up 270% over the last 12 months.

However, there may still be cause for investors to think twice about owning Palantir stock. It's trading at about 160 times forward earnings, way above the Nasdaq Composite's average of 27.7, and many times that of peers.

Analysts are also divided. Half of the 26 analysts covering the stock have a Hold-equivalent rating on the stock, according to FactSet. And even as the majority of the analysts have hiked their price target for the stock as late as this month, for most, it isn't enough to keep up with the skyrocketing share price. Only 31% of analysts rate it Buy.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 25, 2025 09:01 ET (14:01 GMT)

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