The Great Palantir Debate Sparks Intrigue In Direxion's PLTR Bull And Bear Funds

Following the seismic shift that China's DeepSeek R1 imposed on Wall Street, investors needed reassurances regarding their AI-focused holdings. They got exactly that with Palantir Technologies Inc. PLTR.

Recently, the big data analytics specialist posted impressive results, generating earnings per share of 14 cents. This figure beat the consensus estimate of 11 cents. However, investors mostly celebrated the top-line performance, which landed at $827.52 million, some 36% higher than the year-ago quarter's result. Furthermore, the latest tally exceeded estimates by over $46 million.

On a fundamental level, the company closed 129 deals worth at least $1 million. What's more, Palantir inked 32 contracts worth over $10 million. Perhaps not surprisingly given the performance, the software giant's rule of 40 (which comprises revenue growth rate and profit margin) score popped 19% to 81%.

BofA Securities analyst Mariana Perez Mora reiterated a Buy rating while also lifting the price target to $125 from the earlier $90. In a research note to investors, Mora reflected that "2024 was only a dress rehearsal." Looking ahead, Palantir "sees the world ripe for an AI and technology revolution." If so, the DeepSeek AI inference chip may not have been the harbinger of tech doom and gloom.

Still, not everyone is convinced that PLTR stock can sustain the blistering surge that it enjoyed following the earnings disclosure. One notable contrarian expert is Cathie Wood. Her Ark Invest fund made several notable moves, the most prominent arguably being the sale of PLTR stock. Specifically, ARK Innovation ETF ARKK sold 71,069 shares during the day when the security closed at just under $104.

The Direxion ETFs: Put another way, a massive debate has brewed in Palantir. In one corner, some analysts argue that society could effectively be entering an AI renaissance. In the other corner, contrarian experts believe that PLTR stock is overpriced. Either way, financial services provider Direxion offers a product for either side of the discourse.

For the bulls, investors may consider the Direxion Daily PLTR Bull 2X Shares PLTU. A leveraged exchange-traded fund, PLTU seeks 200% of the daily leveraged investment results of the namesake security. For the pessimists, speculators may target the Direxion Daily PLTR Bear 1X Shares PLTD, which seeks 100% of the inverse performance of PLTR stock.

A key characteristic of Direxion's ETF products is convenience. Generally speaking, investors interested in leverage or bearish bets against a publicly traded security must resort to options, which can introduce complexities. In contrast, Direxion ETFs can be bought and sold like any common security, facilitating readymade engagement.

However, leveraged and inverse ETFs are not without unique risks. In particular, prospective traders must realize that the advertised leverage applies for positions lasting no longer than one day. Due to the compounding effect, unpredictable results may materialize for investors who hold leveraged or inverse ETFs beyond the recommended exposure.

The PLTU ETF: Making its debut in December last year, the Direxion PLTR bull fund is off to a cracking start, gaining over 76% since its introduction.

Following Palantir's impressive earnings report, PLTU briefly shot its way above the psychologically important $50 level before giving up some ground.
Currently, the bulls are attempting to build a baseline at $46. The next logical target is to rise back to and secure the $50 level.

The PLTD ETF: As expected, the Direxion PLTR bear fund is struggling, losing more than 34% of value since its December 2024 debut.

Prior to the earnings report, PLTD was maintaining support at the critical $20 level. However, the gangbuster report sank shares below this technical threshold.
The post-earnings session saw the highest volume level so far for PLTD, which may indicate that the bulk of the fund's headwinds have been priced in.