How to Trade Palantir Stock: PLTR Trading Guide

Palantir Technologies Inc. (PLTR) is an American software company that provides innovative data analytics and intelligence solutions for corporations and government agencies. As a key player in the artificial intelligence (AI) space, Palantir has seen increased trading volumes over five consecutive quarters leading up to the first quarter of 2024, reflecting the broader trend of AI’s growing influence in software.

This dynamic market activity could interest traders who track company performance and market trends.

This guide will provide a comprehensive overview of Palantir Technologies, exploring its historical market performance and the factors that may influence its stock price. Understanding these elements can help provide a foundation for making informed trading decisions.

This will also cover different strategies and methods for trading PLTR, including trading contracts for difference (CFDs), as well as the insights and strategies needed to begin navigating the complexities of trading Palantir stock.

What Is Palantir (PLTR)?

Palantir Technologies Inc., founded in 2003, is a software as a service (SAAS) company specialising in big data analytics and artificial intelligence (AI). Based in Denver, Colorado, the company provides platforms for integrating, managing, and analysing data.

Palantir's three main projects include Palantir Gotham, Palantir Apollo, and Palantir Foundry, each playing a crucial role in the company’s operations.

Palantir Gotham serves intelligence and defence needs for militaries and counter-terrorism, while corporate clients utilise Palantir Foundry for data integration and analysis. Palantir Apollo supports continuous integration and delivery across all environments.

Palantir Partnerships

Initially designed as a tool for the U.S. Federal Government, Palantir has expanded its services to state and local governments and private corporations. Meanwhile, key contracts and partnerships have significantly bolstered Palantir's growth. For instance, in December 2020, Palantir signed a $36 million contract to develop a track and trace system for the US government during the coronavirus pandemic, including similar work for the UK’s National Health Service (NHS).

Further strengthening its position, Palantir announced on March 5, 2021, that it had optimised its Enterprise Resource Planning (ERP) Suite to run on Amazon Web Services (AWS), enhancing the capabilities available to PLTR’s and Amazon’s (AMZN) mutual customers.

Among the company’s other notable contracts, Palantir was awarded a $480 million deal with the U.S. Army on May 29, 2024, for its Maven Smart System prototype, an AI technology used in the Central Command area of responsibility in the Middle East. Additionally, on June 4, 2024, Palantir secured a $33 million contract from the Pentagon to develop a data-sharing ecosystem called Open DAGIR.

All in all, understanding Palantir's foundational projects and key contracts can provide essential context for examining the history of its stock.

The Evolution of PLTR Stock

Since its 2020 IPO, PLTR has captured many traders' attention due to its unique position in the market and its contracts with high-profile clients, including government agencies, global banks, and energy companies. Palantir went public through a direct listing on the New York Stock Exchange (NYSE) on September 30, 2020. The stock began trading at $10 per share. At the time, Palantir's direct listing valued the company at US$20.6 billion.

Morgan Stanley (MS), Credit Suisse Group AG, and Goldman Sachs Group Inc. (GS) were the lead banks that advised Palantir on its listing. This strategic guidance was crucial in navigating the complexities of the direct listing process.

On January 27, 2021, Palantir's stock reached its all-time high closing price of $39.00. This peak may have reflected the initial enthusiasm and strong performance following its listing. However, the stock has also experienced volatility since then.

As of July 3, 2024, Palantir's market capitalisation stood at approximately $60.07 billion, with its stock trading at $25.82 per share. This growth highlights the company's continued expansion and market presence. Despite this, Palantir has also faced notable lows, with the all-time low closing price of $13.68 recorded on May 11, 2024.

These fluctuations in Palantir's stock price illustrate the dynamic nature of its market performance. Traders should know that various factors can affect PLTR’s stock value, and past performance may not indicate future results.

Factors Affecting Palantir's Stock Price

Numerous factors can influence the price movements of Palantir stock. The following are examples of some of the most significant drivers for PLTR:

Market Demand for Data Analytics

Data analytics has seen steady global market growth due to consistent business spending on big data and business analytics solutions. This trend, driven by the adoption of advanced technologies and the surge in global data generation, underscores data analytics’ escalating significance across sectors.

As a company specialising in big data analytics, Palantir is a market with growing demand. This market trend could influence PLTR’s stock price. Yet, it’s important to note that the sector also includes competitive companies such as Alteryx and Cognizant (CtSH), which contribute to the dynamic nature of the industry.

Government Contracts and Partnerships

Palantir's history of securing substantial government contracts can play a critical role in driving its stock price. For instance, obtaining a large government contract may enhance the company's revenue and profitability, potentially boosting PLTR’s stock price. Conversely, losing such contracts or failing to secure new ones may negatively impact the stock price.

Technological Innovations and Product Development

Palantir's success heavily depends on its technological innovation and product development capacity. Technological advances may result in new Palantir products and services, potentially expanding the company’s market share and driving up the stock price. On the other hand, delays or failures in innovation and product development may adversely affect PLTR’s price.

It’s important to note that these are not the only factors influencing Palantir’s stock value. A comprehensive understanding of these and other factors is crucial for anyone considering trading PLTR stock.

Methods for Trading Palantir Stock

Traders can engage with Palantir stock in various ways, each with its unique advantages and risks.

Buying PLTR Shares

One straightforward method is purchasing PLTR shares directly through a brokerage account. This approach involves owning a portion of the company and can potentially benefit from price appreciation. However, it also exposes traders to the risk of price declines. While Palantir does not, as of 2024, pay dividends, shareholders can vote on crucial company decisions, which may provide a sense of ownership and involvement in the company's future.

Trading ETFs with PLTR Holdings

Exchange-traded funds (ETFs) provide a way to gain exposure to Palantir without buying individual shares. Examples of ETFs with Palantir holdings as of July 2024 include the Fidelity US Momentum Currency Neutral Index ETF Series L Trust Units (FCMH), VanEck Defense UCITS ETF, and Global X Defense Tech ETF. These ETFs allow traders to potentially benefit from diversification, as the risk is spread across multiple stocks within the ETF.

However, this also means the performance of PLTR within the ETF is influenced by the other holdings, potentially diluting its impact on the overall returns.

Trading Palantir Share CFDs

CFDs provide a way to trade PLTR without owning the underlying asset. Traders can speculate on the stock's price movements with the potential for profit in both rising and falling markets.

However, CFD trading also involves higher risk due to leverage. Leverage can amplify gains but also magnify losses, making it crucial for traders to employ effective risk management strategies, such as setting stop-loss orders and maintaining disciplined trading practices.

How to Trade Palantir Share CFDs

Trading Palantir (PLTR) CFDs involves speculating on the stock’s price fluctuations without buying the shares. As a CFD trader, you would enter into a contract to trade the difference between PLTR’s entry and closing prices.

To make informed trades, you can use different types of analysis to assess PLTR’s potential price movements. Technical analysis focuses on price charts and trends, while fundamental analysis examines the company’s financial health and external market factors.

Once your analysis is complete, you can choose to place a trade by deciding to ‘go long’ (buy) or ‘go short’ (sell). If you go long, you could profit if the closing price is higher than the entry price, with the difference paid by the CFD provider. Conversely, if the closing price is lower, you would incur a loss, paying the difference to the provider.

For short positions, you’d profit if the closing price is lower than the entry price, but if the closing price is higher, you would pay the difference, resulting in a loss.

Traders should continuously monitor their positions, employing stop-loss and take-profit orders to manage risk. These tools can help limit potential losses and secure profits, essential in the leveraged environment of PLTR CFD trading, where both gains and losses can be magnified.

Strategies for Trading PLTR Stock

Various trading strategies can be applied to Palantir stock, each with its own approach and associated risks. Below are three common strategies:

Trend Trading

Trend trading involves identifying and following the prevailing market trend for PLTR stock. Traders can buy when the price is in an uptrend and sell during a downtrend, aiming to profit from sustained directional movements. However, trends may reverse unexpectedly, so monitoring market signals and employing risk management strategies to mitigate potential losses is essential.

Breakout Trading

Breakout trading focuses on identifying significant price levels where PLTR stock moves out of a defined range, signalling a potential new trend. Traders may buy when the price breaks above a resistance level or sell when it falls below a support level. This strategy can capture strong price movements, but false breakouts may occur, leading to potential losses if the anticipated trend fails to materialise.

Swing Trading

Swing trading aims to capitalise on short- to medium-term price movements of PLTR stock by buying at low points and selling at high points within the trend. This approach involves holding positions for several days to weeks, taking advantage of market swings. While swing trading may be profitable during volatile periods, it also carries the risk of price swings going against the position, making timely exits crucial to managing potential losses.

Risk Management in Trading Palantir CFDs

Effective risk management tools are crucial when trading Palantir CFDs to mitigate potential losses and help protect trading capital. Employing stop orders, position sizing, and diversification strategies can help traders navigate the inherent volatility and leverage associated with PLTR CFD trading.

Stop-Loss Orders

Implementing stop-loss orders can limit potential losses by setting a predetermined exit price for a trade. This mechanism helps to ensure that a position is automatically closed if the market moves against the trader, preventing more significant losses. For example, when trading PLTR CFDs, setting a stop-loss order at a specific price below the entry point can help manage risk during unexpected market downturns.

Position Sizing

Determining the appropriate trade size based on individual risk tolerance and account size is essential for managing risk. By carefully calculating the amount of capital allocated to each trade, traders can avoid overexposure to any single position. This approach is particularly important when trading leveraged instruments like CFDs, where potential losses may exceed initial capital inputs if not adequately managed.

Diversification

Diversifying trading capital across multiple assets rather than concentrating it all in PLTR can help manage risk. By spreading speculation across different stocks, sectors, or asset classes, traders may reduce the impact of adverse price movements on any single asset. Diversification may lower the overall risk of a trading portfolio, though it does not eliminate it entirely.

Conclusion: Mastering Palantir Stock Trading

Trading Palantir (PLTR) stock requires a comprehensive understanding of the company's background, market dynamics, and the various factors influencing its stock price. By exploring methods such as buying shares, trading ETFs, and/or engaging in CFDs, traders can identify the best approach with their own trading style and risk tolerance.

Further, risk management strategies, such as stop-loss orders, position sizing, and diversification, are essential in navigating the stock market's inherent volatility. With the insights and strategies provided in this guide, traders can approach trading PLTR with greater confidence and a more structured plan.

If you’re interested in Palantir CFD trading, you can start trading PLTR CFDs with Plus500.

PLTR Stock Trading FAQs

What should I consider when choosing a trading strategy for PLTR stock?

When choosing a trading strategy for PLTR, consider factors like market trends, significant price levels, and short- to medium-term price movements. Trend, breakout, and swing trading are common strategies that require careful analysis and risk management.

How can I trade Palantir Share CFDs?

Trading PLTR CFDs involves speculating on the stock's price movements without owning the shares. Traders can use technical and fundamental analysis to assess potential price movements and decide whether to go long or short. Stop-loss and take-profit orders help manage risk.

Why is risk management critical when trading Palantir CFDs?

Risk management is crucial to mitigate potential losses and help protect trading capital. Strategies like stop-loss orders, position sizing, and diversification help manage the risks associated with leveraged CFD trading, where profits and losses can be magnified.