Palantir Stock Just Fell 8 Days in a Row. History Says What Followed Its Only 2 Longer Losing Streaks.

Palantir Technologies (NASDAQ:PLTR) stock closed lower for eight straight trading sessions through Thursday, Nov. 5. Over that span, shares dropped from $198.84 to $154.99, a fall of around 22%.

That put the AI software maker's stock about 26% under its record close on Oct. 9.

By my count of daily closes since Palantir started trading in September 2020, only two losing streaks have lasted longer. One was a 10-day slide ending May 10, 2021. The other was a nine-day slide ending March 1, 2023.

Each time, shares were up six months later. But a year out, the two cases ended up far apart. And two cases is a tiny sample, so I wouldn't rely on the streak to say much about what happens next.

Image source: The Motley Fool.

Both longer slides were followed by gains

Interestingly, both earlier slides were close in size to this one. The 2021 streak took the stock from $24.11 to $18.47, a fall of around 23%. The 2023 streak took shares from $10.11 to $7.69, a decline of around 24%.

(I measured what followed from each streak's final close, treating 21 trading days as a month.)

After the 2021 slide, Palantir stock gained around 31% in the next month and was up about 24% three months out. Six months later, it was about 41% above that final close. But a year after the slide ended, shares were down about 60% to $7.46.

The 2023 case went the other way over the full year. Shares were up only around 6% a month later. In the next three months, though, they rose by about 91%, and they were up 112% after six months.

Even more, one year out, the stock had more than tripled, gaining around 224% to $24.93.

The seven-day slides

The two seven-day streaks, which ended in September 2022 and June 2026, don't settle much either. After the 2022 slide, shares climbed about 16% in a month, dipped about 1% over three months, and were up about 12% after six months. A year out, the stock had more than doubled.

The June 2026 slide is too recent for a six-month read. But once it ended at $107.27, shares gained around 23% in the next month and about 80% in three.

So, after all four of Palantir's longest losing streaks before this one, the stock was up a month later. But with 12-month returns ranging from a 60% loss to a 224% gain, the streak arguably told investors little about the year ahead.

Is Palantir stock a buy now?

One difference between 2021 and 2023 sticks out to me, and it's the starting price. At $18.47, Palantir's stock traded at around 30 times its 2020 sales. At $7.69 in 2023, it cost under 9 times its 2022 sales. And Palantir lost money in both those years, though it had posted its first quarterly profit right before the 2023 slide started.

Today, Palantir's market value is more than 50 times its sales for the last four quarters, a higher sales multiple than in either case.

Sure, the business is very different now. Palantir's third-quarter revenue climbed 96% year over year to around $2.3 billion. This kept a streak of faster growth going, after rates of 70%, 85%, and 93% in the three quarters before that. And Palantir now turns a big part of its sales into profit, with a 47% operating margin last quarter.

Not every number is speeding up, though. The total contract value of the deals Palantir closed in the third quarter rose just 6% from a year before. The growth rate had already slowed sharply in the previous three quarters, dropping from 138% to 61% and then 49%. Deal timing can make the number lumpy. But if it keeps slowing, revenue growth might eventually follow.

Management's fourth-quarter revenue guidance of about $2.65 billion already implies growth of about 88%, down from the third quarter's 96%.

Palantir made $1.43 a share in its past four quarters. So at roughly $160 as I write, the stock trades at about 112 times earnings. Earlier this week, I put my buy price at 120 times those earnings, or about $172 a share.

In the end, the length of this streak doesn't tell me much about where Palantir stock heads next. What matters more to me is that shares now trade below my buy price.

Yes, a growth stock that just dropped 22% over eight sessions could easily keep swinging. But I think shares are worth a look at this level, and I'd build a position slowly instead of all at once.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.