The month of August has been a challenging one for Palantir Technologies. Despite the hype surrounding artificial intelligence, the data-analytics company’s stock experienced a significant decline, with shares tumbling over 8%. As a result, the month ended with a decline of 24.5%.
While Palantir (ticker: PLTR) has had a successful year overall, with the stock rising by 133% in 2023, the poor performance in August raises concerns about the company’s ability to monetize its artificial intelligence platform effectively.
During the company’s earnings call last month, CEO Alexander Caedmon Karp expressed confidence in finding a way to monetize their AI platform. He stated, “We’ll figure out how to monetize it… First, we’re teaching the market what it is. We’re getting people on board… then we will charge for that.”
However, the uncertainty surrounding Palantir’s revenue generation from AI has raised apprehension among Wall Street analysts. Currently, 50% of analysts covering the stock have Sell ratings. Despite this, Cathie Wood’s ARK Invest funds purchased more of Palantir’s stock recently, providing a vote of confidence in the company.
ARK Invest acquired 673,002 shares of Palantir, valued at $10.1 million based on Thursday’s closing price. The majority of the shares, 525,292, were purchased by Wood’s flagship ARK Innovation exchange-traded fund (ARKK). As a result, the ETF’s stake in Palantir now amounts to $92.2 million.
Palantir’s recent decline came as Morgan Stanley analyst Keith Weiss downgraded the stock from Equal Weight to Underweight. Weiss explained that there is still limited visibility regarding how Palantir plans to monetize its AI platform.
Interestingly, this August downturn is not the worst the company has experienced, given that Palantir went public in September 2020. In August 2022, the stock dropped by 25.4%, and it was only in May of this year, fueled by the AI frenzy, that Palantir was able to recover from those losses.
The enthusiasm around AI can only last for so long before investors start expecting tangible benefits. Therefore, Palantir must address the burning question of how they plan to capitalize on their artificial intelligence platform quickly.
