Dec 2 (Reuters) - Shares of Palantir Technologies Inc recorded their worst plunge on Wednesday, bringing the meteoric rally the Peter Thiel-backed firm enjoyed in November to a halt as the stock extended losses for a fourth straight session. Shares of the U.S. data analytics firm, known for its work with the Central Intelligence Agency and other government agencies, tumbled 11.9% to $22.61 in morning trading. The research arm of Morgan Stanley, which was the lead financial adviser on Palantir’s direct listing, downgraded the stock to “underweight” from “equal-weight” on Wednesday, citing an over-priced valuation compared to its software peers. “We believe much of incremental move since third quarter results are likely related to factors outside of fundamentals, including strong retail long-interest squeezing strong institutional short-interest,” Morgan Stanley analyst Keith Weiss wrote. The stock, currently valued at over $39 billion, for the most part of last month traded in the black, soaring 167%. In November, Palantir beat market expectations for sales and profit in its first quarter as a public company and raised its 2020 revenue forecast, boosted by large government and aerospace contracts. Last Friday, Palantir fell sharply after Citron Research went short on the stock, calling it ‘a full casino’. (Reporting by Munsif Vengattil; Editing by Shinjini Ganguli)