2024 was a milestone year for the data analytics company Palantir Technologies(NYSE:PLTR). Perhaps the most important event for the company was the addition to the S&P500 earlier this year – a feat few thought possible just four years ago when Palantir went public and was quickly written off as a glorified government contracting and consulting organization with no real technological capabilities.
That story has come to an end. In recent years, Palantir has entered a new phase of growth thanks to the company’s successful launch of a new software package called the Artificial Intelligence Platform (AIP).
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All of these factors have contributed to the remarkable interest in Palantir stock in recent months. At the time of writing, Palantir shares are up 283% year to date. With the stock hovering around an all-time high valuation, can the stock possibly continue to climb higher?
In my eyes, I think Palantir stock will continue to run. Below, I’ll break down the company’s latest announcement and why investors should turn their attention to Palantir stock on November 26.
One thing that is often overlooked with stocks is the exchange on which they trade. But believe it or not, trading on the New York Stock Exchange (NYSE) versus the Nasdaq Stock Market can have quite a big impact on a company.
A few days ago, Palantir announced it was moving its listing from the NYSE to the Nasdaq. Palantir’s shares are expected to begin trading on the Nasdaq on November 26.
At first glance, this may seem like commonplace news. But below I’m going to outline some examples of other companies that have switched to the Nasdaq and illustrate how their share prices have developed post-transition.
Below I’ve outlined two companies that have moved from their original stock exchange to the Nasdaq in recent years.
Working day: On September 1, 2017, software company Workday announced that it was switching from the NYSE to the Nasdaq. Workday’s shares began trading on the Nasdaq a few weeks later, on September 20. Here’s how Workday’s stock has trended since becoming a Nasdaq-traded security:
Between September 1, 2017 and September 20, 2017, shares fell by a nominal 2%.
Between September 20, 2017 and September 20, 2018, shares gained more than 30%.
Since joining the Nasdaq, the stock has risen 144%.
PepsiCo: On December 8, 2017, beverage and snack conglomerate PepsiCo announced it would move from the NYSE to the Nasdaq. PepsiCo began trading as a member of Nasdaq on December 20, 2017.
Between December 8, 2017 and December 20, 2017, shares rose by a nominal 2%.
Between December 20, 2017 and December 20, 2018, the stock fell about 7%.
Since joining the Nasdaq, the stock has risen 33%.
I think the decision to move to Nasdaq benefited PepsiCo and Workday in a number of ways. First, the Nasdaq is often associated with technology, growth and innovation. Although PepsiCo is a consumer packaged goods empire, I think its move to the Nasdaq has contributed to the company’s perception as more of a growth stock and less of a run-of-the-mill soft drink and snack company.
Additionally, both Workday and PepsiCo joined the Nasdaq-100 following their respective moves from the NYSE. Earning inclusion in the Nasdaq-100 index can put a company on more investor radars. As such, increases in trading volume and purchases may occur, positively impacting stock prices.
While the news of Palantir’s move from the NYSE to the Nasdaq is interesting, you’re probably wondering why a company would do this in the first place.
Frankly, there are many reasons that can influence a company’s decision to move trade shows. For example, some of the more pedantic factors may relate to fees associated with various scholarships. In my opinion, the fee structures between different exchanges are not really a problem for Palantir.
I rather think the move to the Nasdaq is rooted in branding. Although the Nasdaq is home to companies in many different industries, it is most often tied to the technology sector. Given Palantir’s success in the AI revolution, I think the idea of the company being a government consultancy has been erased.
Palantir’s close alliance with big tech cements the company as a strong force in the AI industry, and I think its move to the Nasdaq will help solidify the company’s image as a legitimate player in the technology space.
I previously predicted that Palantir’s inclusion in the S&P 500 would put the company on the radar of more institutional investors. I’m doubling down on this view now, because joining the Nasdaq should help better position Palantir as an attractive growth stock in a sea of leading tech companies.
Some analysts are already predicting that increased institutional buying combined with the Nasdaq spotlight could propel Palantir into the coveted Nasdaq-100 index. Should that become a reality, I think it’s almost certain that the company’s share price will continue to rise.
While I can’t say for sure what will happen, Palantir’s stock price has already experienced some momentum following the news of the company’s move from the NYSE. I believe that trading on the Nasdaq will ensure that Palantir will be more widely recognized over time as a leading opportunity in AI and technology. For these reasons, I think the stock will follow the trends I outlined above and continue to rise after the move to the Nasdaq.
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Adam Spatacco holds positions at Palantir Technologies. The Motley Fool holds positions in and recommends Palantir Technologies and Workday. The Motley Fool has a disclosure policy.
Prediction: Palantir Stock to Rise After November 26 was originally published by The Motley Fool
