Palantir stock fell over 11% this week despite beating earnings expectations, prompting CEO Alex Karp to publicly criticize short sellers like Michael Burry for alleged market manipulation. The company’s shares remain up 135% in 2025 amid heated debates on valuation.
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Strong earnings trigger backlash: Palantir reported revenue and profits exceeding forecasts, yet shares dropped due to high valuation concerns.
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CEO’s direct attacks: Alex Karp accused short sellers of damaging the economy and U.S. partnerships through panic-inducing bets.
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Valuation metrics: Trading at 220 times forward earnings, Palantir’s market cap surpasses $420 billion, far above peers like Nvidia at 33 times.
Discover why Palantir stock plunged despite robust earnings as CEO Alex Karp blasts short sellers. Explore valuation debates and growth outlook in this in-depth analysis. Stay informed on tech investments today.
What Caused Palantir Stock to Drop Despite Strong Earnings?
Palantir stock experienced an 11% decline this week even after reporting earnings and revenue that surpassed analyst expectations, primarily due to concerns over its elevated valuation. CEO Alex Karp, in multiple CNBC interviews, fiercely defended the company against short sellers, including Michael Burry, whom he accused of market manipulation to undermine a business vital to investors and U.S. government operations. This backlash highlights tensions between rapid growth and investor skepticism in the tech sector.
How Are Short Sellers Impacting Palantir’s Market Perception?
Short sellers like Michael Burry, known from his “Big Short” fame, have taken bearish positions against Palantir and Nvidia, contributing to volatility. In a Tuesday CNBC interview, Karp targeted Burry specifically, claiming his actions aim to “screw the whole economy” by discrediting Palantir’s record financials that support average investors and defense efforts. Data from recent filings shows Burry’s Scion Asset Management holding short positions in both companies, amplifying market doubts.
Palantir’s short interest has dropped to just over 2% from 9% in September, one of the lowest since its 2020 IPO, indicating reduced bearish pressure overall. However, critics like Andrew Left of Citron Research argue the stock is “detached from fundamentals,” suggesting a fair value around $40—far below Friday’s close of $177.93. Despite this, Palantir’s leadership emphasizes sustained revenue growth and strategic partnerships as justification for its premium pricing. Expert analysts from Bloomberg Intelligence note that while the 220 times forward earnings multiple rivals Tesla’s, the company’s AI-driven ontology platform positions it for long-term dominance in data analytics.
Frequently Asked Questions
What is Alex Karp’s stance on short sellers betting against Palantir?
Alex Karp views short sellers as engaging in market manipulation to create unnecessary panic, rather than fairly assessing Palantir’s strong financial performance. He stated in a CNBC interview that these bets harm investors and U.S. government partners, vowing to outperform critics by driving further company success.
Why has Palantir stock risen 135% in 2025 despite recent dips?
Palantir’s impressive year-to-date gain of 135% stems from robust demand for its data analytics software in commercial and government sectors, coupled with AI advancements. Even with weekly declines, the stock has multiplied 25 times over three years, reflecting investor confidence in its expanding market cap above $420 billion.
Key Takeaways
- Valuation debate intensifies: Palantir trades at a steep 220 times forward earnings, drawing comparisons to high-growth tech giants while fundamentals show consistent outperformance.
- Leadership’s bold response: CEO Alex Karp’s public rebukes of short sellers like Michael Burry underscore a commitment to defending the company’s role in economic and defense stability.
- Future growth signals: With short interest at historic lows and earnings beating expectations, investors should monitor upcoming partnerships and AI integrations for sustained momentum.
Leadership, Politics, and Ongoing Criticism
Palantir continues to navigate scrutiny over its contracts with U.S. agencies like Immigration and Customs Enforcement, which have drawn activist backlash. CEO Alex Karp has acknowledged employee departures linked to his pro-Israel stance but reaffirmed the company’s dedication to defense and government missions. During Monday’s earnings call, he remarked on non-investors’ regrets, urging them to “get some popcorn” as Palantir advances.
In a Tuesday CNBC Squawk Box appearance, Karp doubled down on his criticism of Burry’s shorts on Palantir and Nvidia, calling it “bats— crazy” to bet against leaders in chips and ontology. He described short sellers as “dumb” yet motivational, aiming to make them “poorer” through superior execution. This follows a May earnings dip where Karp advised dissatisfied investors to simply exit, emphasizing Palantir’s trajectory to “dominate” via institutional partnerships.
The company’s full-year outlook exceeded Wall Street projections, with revenue growth fueled by commercial adoption of its platforms. Despite Thursday’s 7% drop, late-session recovery pushed shares higher, signaling resilience. Analysts from Reuters highlight that Palantir’s focus on AI and big data differentiates it in a competitive landscape, potentially justifying its valuation premium over peers like Meta at 22 times earnings.
Conclusion
In summary, the recent Palantir stock decline amid strong earnings underscores broader debates on short sellers’ impact and tech valuations in 2025. CEO Alex Karp’s outspoken defense reinforces the company’s pivotal role in data-driven innovation for investors and national security. As Palantir pushes forward with AI enhancements and partnerships, stakeholders should watch for signs of stabilization, positioning it as a key player in the evolving tech ecosystem—consider evaluating its growth potential in your portfolio today.
