A trader presents bullish arguments for a software company
Palantir may have fallen victim to the sale of high growth technologies, but TradingAnalysis.com founder Todd Gordon sees an opportunity to strengthen his position.
The stock of software as a service is down 10% this year, underperforming the overall market.
Gordon sees success ahead for Palantir as a company, and subsequent outperformance for its stock, noting a neglected area of ââthe company’s operations.
âThis is one aspect of the business that few people talk about and is that they have been a key player in the battle for Covid. Medical vendors have used Palantir software to monitor global supply chains, then they helped measure supply shortages and imbalances and proactively move those supplies to meet demand, âGordon told CNBC’sâ Trading Nation âon Tuesday, highlighting in particular the success of vaccine deployments to United States and United Kingdom.
Palantir generates most of its income through government contracts. Its government segment represents nearly 56% of total sales, with the remainder commercial being commercial.
The recent positions of some of Wall Street’s most notable players also support Gordon’s bull case. Stanley Druckenmiller’s Duquesne Family Office recently unveiled a new stake of nearly 6 million Palantir shares, while Cathy Wood’s ARK Invest also holds a position.
His technical stance also looks set for a higher push, Gordon said.
âTechnically speaking here you can see that there has been a pretty incredible run since they hit the market, they’ve jumped all the way to $ 44 and then what you see here is a pretty common three wave technical correction.â , did he declare.
The triangle formed by this median wave of the correction suggests to Gordon that the stock could explode higher.
To take advantage of this move, Gordon presents a potential trade – put a 25/30 call rate spread with the August 20 expiration. A move up to $ 30, the high end of that spread, implies a rise of more than 40% from its Tuesday close above $ 21.
Disclosure: Gordon owns PLTR.