By Elsa Ohlen

Palantir stock was wavering early Monday after shares slumped last week following reports on U.S. defense spending cuts which could affect the data analytics company's balance sheet.

Shares were flat at $101.41 in premarket trading Monday after initially moving higher earlier in the morning, while futures tracking the S&P 500 were up 0.5%. Palantir stock fell 4.6% Friday.

Over the last three trading days the stock has fallen 19%, putting a dent in the massive run that has seen it rise more than 300% over the last year.

The drop came as investors were offloading defense stocks last week after news emerged that the Trump administration could cut defense spending. That may affect Palantir which provides software and artificial intelligence solutions to the Department of Defense.

That Palantir CEO Alex Karp is planning to sell up to $1.2 billion worth of shares also didn't help investors' confidence in the stock over the last few days.

Analysts are divided on the stock. Some, like Wedbush's Daniel Ives, say that last week's drop was an overreaction and Palantir's valuation of about 180 times forward earnings is justified.

Others, like William Blair's Louie DiPalma, see a significant risk of a revenue deceleration in its U.S. government business which could lead to a further drop in share price going forward.

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

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February 24, 2025 06:44 ET (11:44 GMT)

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