Institutions are not interested, retail investors are buying wildly! Will Palantir follow in Tesla's footsteps and fall into "irrational" volatility?

According to the Zhitong Finance APP, the remarkable rise of the American data software giant Palantir (PLTR.US), focusing on "AI + data analysis," in recent years can be described as legendary. Nevertheless, the market still has doubts about whether it can fulfill the high expectations implied by its stock price. Due to overvaluation, many analysts have predicted that its stock price will face a correction.

This has led many to think of another stock with a perplexing valuation logic—Tesla (TSLA.US). Despite traditional valuation models struggling to explain it, Tesla's stock price has remained high for a long time.

So, will Palantir replicate Tesla's trajectory? Or is its bubble on the verge of bursting?

The Astonishing Similarity in Stock Price Trends

Tesla's main upward trend began in 2020, soaring from $24 per share to around $340 currently, with an increase of over 1100%, creating a rare capital myth.

Palantir's rise has also been rapid, with its stock price jumping from $16 to a peak of $190, achieving an approximate increase of 1000%. Both companies have created remarkable short-term performances without achieving a tenfold increase in revenue.

This abnormal trend naturally raises doubts about "a surge must lead to a correction." However, this analysis overlooks a key factor.

Low Institutional Ownership is a Common Characteristic

One reason for Tesla's outstanding performance back then was the dominance of retail investors. Retail and institutional investors have fundamentally different mindsets—professional investors like funds often adhere to traditional valuation criteria, and if discounted cash flow models are not applicable, they will completely avoid the stock.

However, companies like Tesla and Palantir have broken the framework of traditional financial theory, rendering the assumptions in the models ineffective.

Retail investors tend to take a long-term perspective: they believe that Tesla's technology and vision will lead to long-term growth. This reveals a fundamental difference: institutional investors predict the future based on historical data, while retail investors judge the direction of development by observing global trends.

It is this difference that has allowed stocks like Tesla and Palantir to explode, significantly outperforming the market while retail investors are relatively indifferent to traditional valuation standards.

Whether one agrees with this investment logic or not, this is the reality that is happening.

This phenomenon can be quantified through the "institutional ownership ratio" indicator. About 49% of Tesla's circulating shares are held by institutions, which is significantly lower compared to other tech giants (Google (GOOGL.US) and Meta (META.US) have institutional ownership ratios of around 78%).

Palantir's situation is similar to Tesla's, with institutional ownership at about 53%. Compared to Costco (COST.US) (69%) and ExxonMobil (XOM.US) (67%), which have similar market capitalizations, this ratio is significantly low.

Future Trend Insights

Due to the low institutional ownership characteristic shared by Palantir and Tesla, its stock price may continue to exhibit "irrational" fluctuations. Whether to invest in Palantir depends on personal judgment, but investors should be cautious: Tesla's volatility sharply increased after its surge, and Palantir may be approaching this critical point—the answer will be revealed in the coming years