Knowledge analytics titan Palantir Applied sciences (NYSE: PLTR) has been flying in 2024, with the shares rocketing over 118%. However maintain your horses – current insider promoting by CEO Alexander Karp has raised just a few eyebrows within the Metropolis.

So is there bother across the nook for this tech inventory?

Current gross sales

In accordance with the most recent SEC filings, Karp offloaded a whopping $31m value of his shares in a three-day promoting spree. Now, earlier than all of us rush to hit the panic button, let’s take a better take a look at what’s actually happening right here.

First issues first — insider promoting doesn’t all the time imply the corporate is in bother. Karp would possibly simply be choosing up a elaborate new yacht or funding his subsequent massive thought. However I all the time suppose on this scenario it’s value doing a little bit of sleuthing.

Development accelerating

On the optimistic aspect of the fence, the corporate’s progress story continues to be scorching sizzling. Administration just lately reported a mouth-watering 27% yr on yr income bounce in Q2, with complete income hitting a tasty $678.1m. It’s even raised full-year income steerage to $2.746bn.

The enterprise has it’s fingers in all kinds of AI pies, too. Simply the opposite day, it introduced an attention-grabbing partnership with Wendy’s to sprinkle some synthetic intelligence magic on its provide chain. It’s not nearly higher burgers — this type of tech might completely revolutionise how companies function.

Analysts are drooling over the corporate too. Wedbush, as an illustration, has a lofty $38 share price goal. That’s the sort of optimism that’d put a spring in any investor’s step.

Dangers

However right here’s the place it will get a bit sticky. The agency’s valuation is getting fairly excessive. We’re speaking a P/E ratio of round 175 instances. That’d make even essentially the most optimistic tech bro blush. It’s the sort of quantity that means traders predict the corporate’s software program to treatment most cancers, resolve world starvation, and discover a solution to make British trains run on time – all earlier than teatime.

And whereas the corporate’s cosying up to extra industrial shoppers, it’s nonetheless acquired a little bit of a authorities contract behavior that may make some traders twitchy. These massive, juicy authorities offers might be as unpredictable as British climate, which isn’t precisely comforting for the faint-hearted investor.

There’s additionally the small matter of dilution. Administration has been recognized handy out stock-based compensation prefer it’s going out of style. Whereas it’s nice for attracting prime expertise, it might depart current shareholders feeling like their slice of the pie is shrinking quicker than wool in a sizzling wash.

Not one for the faint hearted

So, what’s a Silly investor to do? Nicely, for these with an iron abdomen for volatility, any dips might be an opportunity to seize a slice of the pie at a tastier price. However for individuals who desire investments with a bit much less drama, it could be finest to search for firms with extra down-to-earth valuations.

Success will rely on whether or not it might maintain churning out these income numbers, woo extra industrial clients, and keep forward of the pack. Solely time will inform if Karp’s share sale was a savvy transfer or an indication of bother.

The corporate’s spectacular numbers this yr are actually value noting. However so is the more and more crowded AI and information analytics area. For now, I’ll be watching from the sidelines.