On Friday, Palantir Technologies' stock witnessed a surge.
The shares of Palantir Technologies, symbolized as PLTR (2.08% increase), picked up speed on Friday, escalating as high as 10.4%. Even at 1:44 p.m. ET, the stock was still surging by 8.4%.
The propellant behind this upward surge was an announcement that the company's shares would debut on a new stock market platform.
Welcome aboard, Palantir!
A statement released post-market hours on Thursday disclosed that Palantir was planning to shift the listing of its common shares from the New York Stock Exchange to the Nasdaq Global Select Market, commonly known as the Nasdaq. The switch is scheduled to take effect on Tuesday, Nov. 26, 2024, with the stock continuing to use its existing ticker symbol -- PLTR. Palantir also hinted at its ambition to comply with the eligibility criteria for the Nasdaq-100 Index.
This move comes shortly after Palantir's September 23 addition to the S&P 500.
Companies frequently witness an uptick in their stock price upon joining a benchmark index, as institutional investors and index funds tracking these major indices acquire the company's shares.
Should investors consider buying Palantir now?
While Palantir's inclusion in the Nasdaq doesn't automatically imply buying the stock, there are still compelling reasons to be optimistic.
Palantir's extensive history in AI and data mining eventually spawned its innovative Artificial Intelligence Platform (AIP), which propelled its U.S. commercial division to unprecedented success. Clients collaborate with Palantir engineers at the company's boot camps to create AI tools tailored to resolve real-world business challenges.
During the third quarter, the U.S. commercial revenue for Palantir surged by 54% year-over-year and witnessed an increase of 77% in its client base, demonstrating that Palantir is no longer exclusively reliant on government and military contracts.
The stock's current price might be intimidating to some, with a forward earnings multiple of 169 and a forward sales multiple of 42. However, its forward PEG ratio -- a metric that takes into account its exceptional growth -- stands at only 0.5, traditionally associated with an undervalued stock.
From my perspective, Palantir is a worthwhile investment.
Investors might find Palantir an attractive option, given its recent performance and forward PEG ratio. With its inclusion in the Nasdaq-100, the company has the potential to draw more institutional investment, further boosting its stock price. As Palantir continues to expand its commercial division and AI capabilities, investing money in its shares could be a strategic move in the world of finance.
Given Palantir's impressive growth, even with a high forward earnings multiple, its forward PEG ratio of 0.5 suggests that the stock may be undervalued, making it a potential investment opportunity in the finance market.
