TRADE SETUP

Where do we stand fundamentally?

Risks of Over-Reliance on Government Contracts

1. Concentration Risk

• When a single client (e.g., the U.S. Army) or a small group of clients accounts for a large share of revenue (60%+ for PLTR), the company is vulnerable to budget cuts, political shifts, or procurement delays.

• Example: A change in administration could reprioritize defense spending or cancel existing contracts.

2. Cyclic and Bureaucratic

• Government funding can be slow, inconsistent, and tied to election cycles or congressional gridlock.

• Delays in appropriations or political standoffs can impact contract renewal or payment timelines.

3. Regulatory and Transparency Pressure

• Companies dealing with government agencies often face increased scrutiny, audits, and public pressure—especially when involved in surveillance or AI defense applications.

• Ethical concerns about the use of AI in warfare or law enforcement may affect public sentiment or lead to policy changes.

4. Limited Pricing Power

• Governments negotiate aggressively and dictate terms, which can squeeze margins or limit pricing flexibility.

• Contract renewals may be subject to open bidding, introducing competition risk.

PLTR is testing the steep uptrend trendline at 175 resistance. This should be a strong resistance for a possible rejection and correction lower with an increased possibility of a deeper pullback as the valuation is too high concerning the risk of operation.

For the rally to continue, we need a sustained breakout above 175. A break below 156 could open a test of the next support, 125, in the medium-term.

_{I am taking a near-term short-trade entry with an SL above 186 to target 134. You can buy put options as well.}