March 10 Palantir Technologies Inc. (PLTR, Financial) shares fell 8% on Monday morning despite the firm's upcoming inclusion in the S&P 100. The data analytics company is set to replace Dow Inc. ahead of trading on Monday, March 24, as part of the quarterly index rebalance intended to keep the S&P 100 representative of mega-cap market leaders.
Investor anxiety over potential Defense budget cuts, impacting Department of Defense spending on projects like Elon Musk's DOGE initiative, contributed to the decline. Since reaching a peak of $125.41 in mid-February, Palantir's stock has dropped 37%, reflecting concerns over how budget adjustments may affect its lucrative government contracts.
In contrast, Palantir still looks promising to Wedbush analyst Dan Ives. Ives believes the company will continue to land more deals and IT allocations at other government agencies as the company plays a strategic role in federal budget cycles for fiscal years 2025 and 2026. However, Palantir's involvement in high-priority DoD programs should lock it in to the least exposure to budget cuts and bolster its long-term prospects, he added.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.