The culprit? Earnings. Or should we say a lack thereof.
Palantir reported a surprise loss for its fourth quarter, losing 8 cents a share. That was more than double what analysts were expecting.
On the plus side though, revenue easily breezed by expectations of $300 million, growing 40% year over year to $322 million.
Will the revenue figure be enough to convince the bulls to buy the dip? That’s what investors are trying to sort out now, along with the long-term potential with its recent partnerships, like Palantir's recent deal with International Business Machines (IBM) - Get Report.
Of course, the technical situation may help as well.
Palantir is dipping into a potentially strong area of support on the charts, which may lend its hand to a nice bounce. Let’s take a look.
In January, Palantir stock gave investors a powerful move to the upside. Shares jumped 25% in a single day and closed near the session highs.
The stock impressively cleared downtrend resistance (blue line) and range resistance near $29. It also gave bulls a monthly-up rotation by clearing $31.24. All it had left was the all-time high at $33.50, a level it cleared in the following session.
Since then though, trading has been a bit choppier in Palantir stock.
Amid the recent run, it was clear that $40 was stiff resistance. Following the dip, Palantir also put in a lower high (blue circle on the chart), before falling 16.4% over three straight daily declines ahead of earnings.
The current area is now critical. Palantir stock is trading down into former range resistance near $29. It’s also trading down into the 50-day moving average and a VWAP measure from the previous high.
In other words, this area should act as support. If it fails, uptrend support comes into focus, along with the $25 area.
On the upside, let’s see how Palantir stock does if it bounces. Specifically, I want to see if it can reclaim the $31.25 area and the 10-day moving average. Above these marks puts $33.50-plus back in play and likely puts bulls back in control.
If these marks instead act as resistance, see that current support remains intact.