Why Palantir Stock Dropped 24.3% in April
Shares of Palantir (NYSE: PLTR) dropped 24.3% in April, according to S&P Global Market Intelligence. The big data analytics and software firm greatly underperformed the S&P 500 Index last month, which was down only 8.8%. It is likely that Palantir was affected by fears over rising interest rates, inflation, and the potential for a recession, which has severely impacted the prices of growth stocks.
There were no material business updates from Palantir in April, so all these price moves come from changes in market sentiment. Last month, inflation continued to run rampant throughout the United States' economy, with the last recorded data point at an 8.5% year-over-year rate. How does this affect the price of Palantir stock? Well, when inflation is high, the Federal Reserve tends to raise interest rates. When interest rates rise, it becomes more attractive to hold U.S treasury bonds and less attractive to hold an expensive growth stock. With inflation running high, Federal Reserve members have stated they plan to quickly raise interest rates in the coming quarters. This has caused many investors to sell high-growth stocks like Palantir.
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Source Fool.com
