Palantir Blasts Off – But Will This Rocket Run Out of Fuel?
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Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in PLTR.
Shares of Palantir Technologies, Inc. (Ticker: PLTR) have been flying high as of late. The stock recently hit new all-time highs following a blockbuster quarter and other exciting announcements including integrating Elon Musk’s Grok AI into its existing AI platform. But with traders feeling the excitement about recent developments, we must begin to ask whether the rally has run its course in the near-term.
Not Your Father's Data Analytics
Palantir’s business model goes far beyond just offering data analytics tools. The company has a strong foothold in both the public and private sectors, providing cutting-edge solutions for government agencies, large enterprises, and industries requiring sophisticated data management. Palantir's software empowers organizations to leverage vast amounts of data to make critical decisions in real time, giving it an edge in an increasingly data-driven world.
Palantir’s innovation in machine learning, AI, and advanced data processing techniques separates itself from its competition. Additionally, Palantir has been expanding its role in the private sector, especially with its growing relationships with large corporations. As more businesses recognize the value of data-driven insights, Palantir could see its market opportunities expand further, allowing it to increase its revenue streams.
This success led PLTR to blowout their recent earnings report, as they reported an earnings-per-share (EPS)* of $0.14, which was above analyst estimates of $0.05.
Traders that think this momentum can continue may find an opportunity with Direxion’s Daily PLTR Bull 2X Shares (Ticker: PLTU), which seeks daily investment results, before fees and expenses, of 200% of the performance of Palantir Technologies, Inc. common stock (Ticker: PLTR).
Below is a daily chart of PLTR as of February 6, 2025.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results.
Too Much, Too Fast?
Despite Palantir’s strong positioning, there are several challenges on the horizon that could weigh on its earnings growth. Rising competition in the data analytics space, with both startups and established tech giants ramping up their offerings, could pressure Palantir’s share of the market. Additionally, the company’s reliance on large government contracts for a significant portion of its revenue leaves it exposed, especially with DOGE (Department of Government Efficiency) cutting contracts left and right.
Plus, Palantir’s transition into the private sector may not be as smooth as expected. While the company has seen success in attracting commercial clients, the private sector market is highly competitive, and profit margins could be impacted as it faces pricing pressures and increased competition from other software providers.
If the economy continues to expand, it should be able to continue growing. The next gross domestic product (GDP) report is on February 27, and if it comes in below estimates, it could prove to be a warning sign that the future prospects for PLTR are deteriorating.
In this situation, Direxion’s Daily PLTR Bear 1X Shares (Ticker: PLTD), which seeks daily investment results, before fees and expenses, of 100% of the inverse performance in common shares of Palantir Technologies, Inc. (Ticker: PLTR) could find a bid.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Funds have derived all disclosures contained in this document regarding Palantir Technologies Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Palantir Technologies Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Palantir Technologies Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Palantir Technologies Inc. could affect the value of a Fund’s investments with respect to Palantir Technologies Inc. and therefore the value of the Funds.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with PLTR and may increase the volatility of the Bull Fund.
Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with PLTR and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to PLTR is impacted by PLTR’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to PLTR at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to PLTR increases on days when PLTR is volatile near the close of the trading day.
Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with PLTR and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to PLTR is impacted by PLTR’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to PLTR at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to PLTR increases on days when PLTR is volatile near the close of the trading day.
Palantir Technologies Inc. Investing Risk – Palantir Technologies Inc. faces risks associated with: a limited number of customer accounts for a substantial portion of its revenue; the development and deployment of new technologies; reliance on or capability with third-party products and services; the ability to hire, retain, train and motivate qualified personnel and senior management; sales and operations; intense competition; among other risks.
Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily PLTR Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.