Monster insider trading alert for Palantir stock

An SEC Form 4 filing from October 15 reveals that Palantir (NYSE: PLTR) director Lauren Friedman, who joined the company’s board of directors in 2021, sold 7,321 shares of the data analytics firm in an October 11 transaction.

The sale was executed at a price of $43.9 per share — bringing the total value of Friedman’s sale to $321,391. 

The timing of this transaction — just three weeks ahead of the company’s Q3 2024 earnings report, and just in time for the stock’s new all-time high on Friday, October 11, leaves investors and traders wondering if this is a bearish signal preceding an imminent correction or even crash.

PLTR stock at all time high — valuation worries remain

At press time, PLTR stock price is at $40.98 — after a 2.27% loss on the daily chart expanded monthly losses to 4.12%. However, these recent movements have done little to curb PLTR’s upward momentum — shares are still up 148.37% year-to-date (YTD).

However, that very same momentous rise has left both retail investors and Wall Street analysts a tad weary — while the gains are impressive, there are widespread doubts if the current PLTR share price is sustainable.

The strategic data solutions provider is currently trading at a forward price-to-earnings (P/E) ratio of 94.89 — far above the averages of both the industry and the wider market. At this point in time, there’s little doubt that the stock price has outpaced the fundamentals — even accounting for impressive results in the last earnings call.

Famed investor Jim Cramer once called PLTR a ‘meme stock’ — while that sentiment is a bit extreme, valuation concerns are commonplace, particularly as short interest has skyrocketed by 45% between September and October.

Even if a crash or sharp correction does not occur, after such a meteoric rally, it’s highly unlikely that there’s more room for growth in the short to medium term.

Is Friedman’s sale a bullish signal?

While Friedman’s sale coincides with a lot of important events, a closer look at the SEC filing reveals that the sale was done pursuant to a 10b5-1 plan. 

In simple terms, this means that the sale was planned months ago — to be more specific, the plan dates back to August 19, 2023, a time when PLTR stock price was roughly $14.

Friedman realized an impressive 213.57% return on the stock sale — and while this particular transaction is not bearish per se, traders and investors should consider locking in their profits. While the long-term outlook on PLTR is promising, it’s more than likely that better entry points for going long will arise in the near future.