Why Palantir Stock Is Sinking Today

Key Points

• The Bureau of Labor Statistics published August jobs numbers this morning that were weaker than expected.

• While the weak jobs report supports the case for interest-rate cuts, it's also raising questions about the health of the U.S. economy.

• Insider selling also appears to be pressuring Palantir stock today.

• 10 stocks we like better than Palantir Technologies ›

Palantir (NASDAQ: PLTR) stock is pulling back in Friday's trading. The artificial intelligence software leader's share price was down 2.6% as of noon ET amid the backdrop of a 0.5% decline for the S&P 500 and a 0.2% dip for the Nasdaq Composite. The tech company's stock had been down as much as 5.2% earlier in the day.

Palantir stock is moving lower today as investors react to the latest U.S. jobs data and what the figures could mean for the outlook on interest rates and the broader economy. Recent disclosures of stock selling by company insiders also appears to be factoring into the valuation pullback.

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Palantir stock slips as the market reacts to jobs data

The Bureau of Labor Statistics published its August jobs report this morning and announced that 22,000 jobs were added in the month. The growth came in significantly below the 75,000 job additions called for by the average economist estimate.

While the weak jobs growth initially powered bullish momentum thanks to the belief that the data points to to an interest rate cut from the Federal Reserve this month, the positive momentum faded as other concerns took the spotlight. It looks likely that the Fed will cut rates this month, but the weak jobs data is prompting sell-offs due to fears that the U.S. economy is weakening.

Insider selling is also weighing on Palantir stock

In a filing submitted to the Securities and Exchange Commission yesterday, Palantir revealed that three company insiders had recently sold stock. Board member Jeffrey Buckley sold 2,803 shares, with the earliest date of sale in the transaction being Aug. 29. Board member Alexander Moore sold 20,100 shares on Sept. 2.

Chief financial officer and treasurer David Glazer also exercised stock warrants on Sept. 2 that allowed him to purchase 37,770 shares of Palantir stock at a price of $4.72 per share, but he then proceeded to sell even more stock the same day. Across eight transactions that day, Glazer sold 81,000 shares of company stock. While insider selling doesn't necessarily mean that a company and its stock are in trouble, recent sales made by company insiders appear to be adding to concerns about Palantir's heavily growth-dependent valuation.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.