2024 has been a milestone year for data analytics company Palantir Technologies(NYSE: PLTR). Perhaps most important event for the company was its addition to the S&P 500 earlier this year — an achievement few thought was possible just four years ago when Palantir went public and was quickly written off as a glorified government contracting and consulting operation with no real technology capabilities.
That narrative has come to an end. Over the last couple of years, Palantir has entered a new phase of growth thanks to the company’s successful launch of a new software suite called the Artificial Intelligence Platform (AIP).
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All of these factors have contributed to notable interest in Palantir stock over the last several months. At the time of this writing, shares of Palantir have gained 283% year to date. With the stock hovering around an all-time high valuation, can it possibly keep climbing higher?
In my eyes, I think Palantir stock is set to continue running. Below, I’ll break down the company’s latest announcement and point to why investors should have their eyes on Palantir stock on Nov. 26.
One thing that often goes overlooked with stocks is the exchange that they trade on. But, believe it or not, trading on the New York Stock Exchange (NYSE) versus the Nasdaq Stock Market can actually have some pretty big implications for a company.
A few days ago, Palantir announced that it is moving its listing from the NYSE to the Nasdaq. Shares of Palantir are expected to begin trading on the Nasdaq on Nov. 26.
On the surface, this may seem like mundane news. But below I’m going to break down a number of examples of other companies that have switched to the Nasdaq and illustrate how their share prices moved following the transition.
Image source: Getty Images.
Below, I’ve outlined two companies that have moved from their original stock exchange to the Nasdaq in recent years.
Workday: On Sept. 1, 2017, software company Workday announced that it was switching from the NYSE to the Nasdaq. Shares of Workday began trading on the Nasdaq a couple of weeks later, on Sept. 20. Here is how Workday stock has moved since becoming a Nasdaq-traded security:
Between Sept. 1, 2017, and Sept. 20, 2017, shares declined by a nominal 2%.
Between Sept. 20, 2017, and Sept. 20, 2018, the stock gained more than 30%.
Since becoming a member of the Nasdaq, the stock has increased 144%.
PepsiCo: On Dec. 8, 2017, beverage and snack conglomerate PepsiCo announced that it was moving from the NYSE to the Nasdaq. PepsiCo began trading as a member of the Nasdaq on December 20, 2017.
Between Dec. 8, 2017, and Dec. 20, 2017, shares rose by a nominal 2%.
Between Dec. 20, 2017, and Dec. 20, 2018, the stock dropped roughly 7%.
Since becoming a member on the Nasdaq, the stock has increased 33%.
I think the decision to move to the Nasdaq benefited PepsiCo and Workday in a number of ways. First, the Nasdaq is often affiliated with technology, growth, and innovation. While PepsiCo is a consumer packaged goods empire, I think the move to the Nasdaq helped the company’s perception as more of a growth stock and less of a mundane soda and snack business.
In addition, both Workday and PepsiCo joined the Nasdaq-100 following their respective moves from the NYSE. Earning inclusion into the Nasdaq-100 index can help a company land on more investor radars. As such, increases in trading volume and buying can occur which positively influences stock prices.
While the news about Palantir’s change from the NYSE to the Nasdaq is interesting, you’re probably wondering why a company would do this in the first place.
To be honest, there are a lot of reasons that could influence a company’s decision to move exchanges. Some of the more pedantic factors could be related to fees associated with different stock exchanges, for example. In my eyes, the cost structures among different exchanges isn’t really a concern for Palantir.
Rather, I think the move to the Nasdaq is rooted in branding. While the Nasdaq is home to companies in many different industries, it is most commonly affiliated with the technology sector. Given Palantir’s success throughout the AI revolution, I think the notion of the company being a consulting business for the government has been erased.
Palantir’s close alliance with big tech cements the company as a strong force in the AI industry, and I think moving to the Nasdaq will help strengthen the company’s image as a legitimate player in the technology realm.
I previously predicted that Palantir’s inclusion into the S&P 500 would help get the company on the radar of more institutional investors. I’m now doubling down on this stance, as becoming a member of the Nasdaq should help better position Palantir as an attractive growth stock in a sea of leading technology companies.
Some analysts are already projecting that increased institutional buying in combination with the spotlight of the Nasdaq could propel Palantir into the coveted Nasdaq-100 index. Should that come to fruition, I think it’s almost a certainty that the company’s share price will continue soaring.
While I can’t say for certain what will happen, Palantir’s stock price has already experienced some momentum following the news of the company’s switch from the NYSE. I think trading on the Nasdaq will help Palantir become more widely recognized as a leading opportunity in AI and the technology arenas over time. For these reasons, I think the stock will follow the trends I outlined above and continue soaring after its move to the Nasdaq.
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Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies and Workday. The Motley Fool has a disclosure policy.
