Palantir $PLTR was a big winner AI but then August started. Now its stock is in free fall and could head lower.

Shares of Palantir fell 8.75% to $15.55 on Wednesday, the biggest drop since November 2022. With that decline, the stock is now below its 50-day moving average at $16.16 for the first time since May. The price has broken its uptrend line, which was around $17, and its first support level near $16. Even worse, the stock has fallen six days in a row, reaching 22% during its losing streak, its worst six-day stretch since May 2022.

It's an odd move, as Palantir stock peaked at $19.99 on Aug. 1, a 211% increase since the beginning of the year. Palantir also reported earnings on Monday and numbers that initially looked good. The company reported earnings of 5 cents per share, in line with analysts' forecasts, while raising its revenue estimates. It even announced a $1 billion stock buyback.

Even analysts seemed to like the numbers. "Profitability is ahead of plan, FCF is holding up better than expected, there is $3 billion on the balance sheet, and there is enthusiasm that the company may be eligible for inclusion in the S&P 500 in the coming quarter," wrote Raymond James analyst Brian Gesuale.

"We reiterate our upgrade and move our target to $22.00." Even some bears raised their price targets.

But sales growth has slowed and sales estimates have only increased by $2 million, which is why the stock is now down. "In hindsight, we see this quarter as mixed at best, given the slowdown in growth and weak leading indicators," RBC analyst Rishi Jaluria wrote on Monday.

The next support level is $15, then $14. After that, investors need to look at its 200-day moving average at $10.

Hopefully that won't happen.