Palantir Technologies (PLTR) shares took a hit Wednesday, dropping nearly 5% as a UK regulatory watchdog turned up the heat on the company's high-profile contract with the National Health Service. The broader market wasn't exactly helping — the Nasdaq was down 0.21% and the tech sector was the weakest of the day — but the real story here is about data, trust, and a government contract that keeps generating headlines.

UK Regulator Addresses FDP Metrics

The UK's Office for Statistics Regulation (OSR) stepped in on Wednesday to address public concerns about how NHS England communicates performance metrics for the Federated Data Platform (FDP), the system Palantir built to help the NHS manage patient data more efficiently.

Back on June 6, NHS England updated its methods page with a notable caveat: "We cannot therefore draw conclusions about cause and effect as other variables have not been controlled for." The OSR revealed that this addition came after Freedom of Information requests regarding FDP data analysis. NHS England has now committed to placing those caveats prominently on the main FDP website and has commissioned Imperial College to conduct an independent academic evaluation of the platform.

For Palantir, which has long pitched its software as a tool for data-driven decision-making, the implication that its metrics might be oversold is not a great look.

Contract Controversies and Criticism

The regulatory scrutiny is just the latest chapter in a longer saga of criticism surrounding the NHS contract. Jo Maugham, executive director of the Good Law Project, didn't mince words: "Palantir is not — and frankly never has been — a company that can be trusted with this nationally important contract."

That sentiment has some real-world consequences. In a Guardian letter published on July 20, Dr. Devan Moodley, CEO of Health Connect Global, pointed out that Greater Manchester's integrated care board has already declined to use the Palantir platform, instead relying on local capabilities built with UK universities and firms. When regional health systems start voting with their feet, it adds a layer of uncertainty to the contract's long-term value.

Financial Results Approaching

Palantir is set to report its second-quarter financial results on Aug. 3, with analysts projecting earnings per share of 33 cents on quarterly revenue of $1.81 billion. That's the kind of number that could either calm nerves or amplify them, depending on what management says about the pipeline and the regulatory environment.

Technical Analysis

From a chart perspective, Palantir is still trying to find its footing after a longer downtrend. The stock is trading 2.9% below its 50-day simple moving average of $132.22 and a whopping 17.1% below its 200-day SMA of $154.84. That keeps the intermediate and long-term bias tilted bearish. The 20-day SMA at $126.81 is just underneath the current price, but the 20-day remains below the 50-day — a bearish signal — and the Death Cross that formed back in February (50-day below 200-day) continues to hang over any rally attempts.

Momentum, as measured by the Relative Strength Index, sits at 47.37 — right in neutral territory. That's consistent with a stock that's chopping sideways rather than trending strongly in either direction.

Key levels to watch: resistance at $136.50 and support at $122.50.

At the time of publication Wednesday, Palantir shares were down 4.93% at $126.12.