Palantir Stock Is at 6-Month Lows - Time to Buy PLTR?

Palantir Technologies Inc. (PLTR) stock has dropped to a new 6-month low, which could mean it's time to buy for patient investors. One way to do this, if PLTR keeps falling, is to sell out-of-the-money puts to set a lower buy-in price and get paid while waiting.

PLTR closed down at $128.06 on Friday, April 10. That's below the prior 6-month low of $128.84 on Feb. 28. Earnings are due out on May 4, so PLTR could move higher ahead of its results.

Moreover, PLTR stock is worth considerably more than its present price, based on its strong free cash flow (FCF) and FCF margins.

Higher FCF Expected Over the Next 12 Months

I discussed this in my Feb. 18 Barchart article on Palantir ("Has Palantir Bottomed? Probably, Based on Huge, Unusual Put Options Activity in PLTR") after the company released its Q4 results on Feb. 2.

I showed that Palantir expects its 2026 adjusted FCF margin to be 56.7% at the midpoint, well over its 51% 2025 margin, and even higher than its Q4 56.0% adj. FCF margin. 

Moreover, analysts have hiked their revenue forecasts over management's guidance. The company projected $7.19 billion in revenue for 2026.

But, Seeking Alpha shows that 28 analysts now project much higher revenue:

  2026 revenue …….. $7.26 billion and 2027 revenue ………….. $10.39 billion 

That implies a next 12 months (NTM) average of $8.825 billion. As a result, using a 56.7% adj. FCF margin:

  $8.825 billion x 0.567 = $5.0 billion NTM adj. FCF 

That is over twice the $2.27 billion in adj. FCF it made in 2025. It's also over $1 billion more than management midpoint forecast of $4.025 billion for 2026, as I showed in my Feb. 18 article.

This implies it valuation could be significantly higher.

Higher Price Targets for PLTR Stock

For example, let's assume theoretically that Palantir were to pay out 100% of its FCF to shareholders. Based on its present market value of $306.3 billion, according to Yahoo1 Finance, its 2025 FCF yield is:

  $2.27 billion / $306.278b = 0.0074 = 0.74% FCF Yield

As a result, using our $5 billion FCF forecast for the next 12 months (NTM), PLTR stock could be worth much more:

  $5.0 billion / 0.0074 = $675.7 billion mkt value

That's over 120% higher than today's market cap. However, just to be conservative, let's assume the market lowers its valuation metric to just 1.0%:

  $5 billion / 1.0% = $500 billion 

That implies that PLTR is still worth almost $200 more, or +65% above its present market cap of $303 billion.

Thus, PLTR stock's price target (PT) is 65% higher, over $211 per share.

  $128.06 x 1.65 = $211.30 PT

By the way, analysts agree that PLTR is worth much more. Yahoo! Finance says 29 analysts have an average PT of $185.25, and Barchart's mean survey PT is $198.30. AnaChart's mean price for 19 analysts who've written recently on PLTR is $182.75.

However, there is no guarantee PLTR will rise to these price targets. One way to set a lower buy-in and get paid is to sell short out-of-the-money (PLTR) puts.

Shorting OTM PLTR Puts

For example, out-of-the-money (OTM) put options expiring on May 15 have huge yields. The $115 strike price, over 10% below Friday's close of $128.06, has a midpoint premium of $5.05. 

That means an investor who enters an order to “Sell to Open” can make an immediate yield of 4.39% over the next month, after posting collateral of $11,500 (i.e., 100 shs per put x $115):

  $505/$11,500 = 0.0439 = 4.39% one-month yield

Moreover, more risk-averse investors can short the $110.00 strike price put, 14% lower than Friday's close, for a lower, but still attractive $3.68 premium:

  $368/ $11,000 = 0.03345 = 3.345% one-month yield

Both of these contracts have low delta ratios - 26.7% and 20.8%, respectively, implying a low chance that PLTR will fall to these strike prices. But even if it does, the investor's account will have low breakeven points (i.e., $115 - $5.05, or $109.95, and $110 - $3.68, or $106.32).

The bottom line is that PLTR stock is at new lows, looks deeply undervalued based on its strong FCF, and shorting OTM puts is an attractive way to play it.