Palantir's rally could be on pause.
The stock was volatile on Tuesday, a day after a monster rally triggered by the company clinching a $44 million contract with the Food and Drug Administration. The stock remains up more than 200% since its September market debut.
Mark Tepper, president of Strategic Wealth Partners, told CNBC on Tuesday the stock looks like a hold after its massive run, but ripe for a some profit-taking.
"I actually own this one. It's been a great trade for me. It's probably time for me to start taking some profits," Tepper said on "Trading Nation."
Palantir's ability to grow beyond its current customer base is one concern to Tepper.
"There's no doubt these guys have a great niche — surveillance, defense, cybersecurity. That is modern warfare, as we know it. But I question how much they can really expand outside of their government customers. Like, what is their [total addressable market] outside of the government? And I'm guessing that at this point is probably not that big," Tepper said.
Palantir's government business makes up nearly 47% of current total revenue, according to FactSet. The company is expected to post $1.07 billion in sales this year, growing to $1.4 billion in 2021.
Todd Gordon, founder of TradingAnalysis.com, is more optimistic Palantir can expand beyond its government clients.
"On their S1, they claim their total addressable market is $119B with $63B in the public sector, which leaves $56B in the private sector. Many think their potential market is limited, but research I've done … indicates investors are under-appreciating their ability to target the private sector," Gordon told "Trading Nation" in an email. "There is a lot of misunderstanding of what they actually do and services they are capable of producing so it's way too early to say this company is ahead of itself."
The charts also look supportive, despite the stock's short history, according to Gordon. Increasing volume coupled with share gains in the last few months followed by a consolidation and decreasing volume indicates "a lack of real selling pressure," he said.
"Further, we saw a nice reversal candlestick on Dec. 2, strengthening the case that the highs will be taken out. I do not hold the stock, but will be looking to add for a trade-only through the $35 mark with defined stops," he said.
Palantir closed Tuesday at $28.59 a share.
Disclosure: Strategic Wealth Partners holds PLTR.