Palantir is Moving to the NASDAQ Exchange
To the average investor, Palantir’s (PLTR) news this morning may mean very little, but it’s a big deal.
After Thursday’s market close, Palantir announced that the company would be moving from the New York Stock Exchange (NYSE) to the NASDAQ Market. The change is effective November 26.
The switch between exchanges doesn’t happen that often these days.
More than a decade ago, there was flurry of companies that switched between the exchanges both were battling for business from the other. The NYSE had become aggressive in marketing initial public offerings, boosting the image of the exchange.
The last company to make the move? Xerox in September 2021.
Xerox shares rallied more than 10% following its move, and no disrespect to Xerox… its no Palantir.
Why the Move to the NASDAQ
The NASDAQ has been and continues to be the “technology exchange”.
Companies like Apple, Microsoft, NVIDIA and Google were born on the NASDAQ, giving it the lasting image as America’s technology exchange.
The Nasdaq has been known for a few advantages over the NYSE:
- Technological Advantages: NASDAQ’s high-tech trading systems attract technology companies seeking a cutting-edge, innovative trading platform.
- TCost-Effectiveness: NASDAQ often offers lower listing fees than NYSE, reducing costs for companies and enhancing affordability.
- TCorporate Image and Branding: NASDAQ’s modern, tech-focused image better aligns with tech and biotech companies, enhancing their brand association.
- TFlexibility and Requirements: NASDAQ’s more accommodating listing requirements appeal to smaller or emerging companies not meeting NYSE’s stringent criteria.
- TMarket Perception and Investor Base: NASDAQ’s investor base, focused on technology, attracts companies seeking investors with similar industry alignment.
All of these are reasons that Palantir may have factored into their decision to change, but there’s another that’s likely to kick in shortly after the moving date on November 26.
Index and ETF Inclusion will Boost Palantir Higher Again
Just a few months ago, Palantir joined the S&P 500. The announcement was made on September 6.
Palantir shares rallied 25% from the announcement date to the official date of inclusion, September 23.
That rally was in part based on the huge amount of assets that were required to be invested in Palantir by the hundreds of mutual funds, ETFs, annuity subaccounts and all other instruments tied to the S&P 500.
Palantir’s move to the Nasdaq will certainly result in the stock’s immediate addition to the popular Nasdaq 100 Index.
As of today, Palantir would be the 25th largest company by market cap on the Nasdaq 100. The company would fit between semiconductor company Applied Materials (AMAT) and health care company Amgen (AMGN).
As the second largest indexed equity fund (by market cap), the inclusion in the Nasdaq 100 will spark yet another round of fund and ETF rebalancing that will drive Palantir shares even higher.
And Then There’s the Analysts
I’ve already covered the lack of Palantir coverage by the Wall Street analyst community.
Currently, only 21% of Wall Street analysts have Palantir ranked a “buy”. This makes Palantir the lowest recommended, best performing stock in the AI industry.
For years now, analysts have held an overwhelmingly bearish view of Palantir stock, despite its fundamental and technical strength.
The analysts’ gripe appears to go back to 2021.
At that time, analysts held a bullish outlook on Palantir fresh after its listing on the NYSE. The company hit its first quarterly earnings targets then missed its second quarter expectations. Wall Street turned its back on the stock then and still hasn’t given shares the time of day.
Just two weeks ago, Alex Karp – CEO of Palantir – commented on the lack of analyst attention towards their stock. The CEO expressed his happiness that “We have a ton of player haters.”…”Keep hating on us.”
Today’s announcement and the actions that follow it will likely begin the slow march of Wall Street analysts’ begrudgingly upgrading the stock.
How to Trade the Palantir News
As indicated earlier this week…
Palantir shares are likely to start outperforming companies like NVIDIA, Microsoft and Google over the next 2-5 years as AI services are now harnessing the power of AI created by those companies.
As a result, Palantir shares are a strong buy with a price target of $80 and then $100.
Options investors may consider using a LEAPs strategy to leverage the expected move.
January 15, 2027 calls remain relatively inexpensive and a simple way to diversify a long-term AI portfolio for those with the education and background to trade options.
— Chris Johnson
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Source: Money Morning