.jpg?auto=compress%2Cformat&cs=srgb&fit=max&w=3840)
GameStop short seller targets Palantir
“There’s never been a company that has that type of multiple or that type of P/E that’s not corrected 50%,” Citron Research’s Andrew Left said.
Short seller Andrew Left, of Citron Research, spotlighted Palantir’s seemingly absurd valuation in a television appearance Wednesday, suggesting that the retail momentum favorite — the best-performing stock in the S&P 500 this year — could be set up for a serious stumble.
“If this was the greatest company that was ever created and we gave it the same multiples as, let’s say, Nvidia in 2023, the stock still can get cut by two-thirds,” Left said during an appearance on Fox Business, adding that he is shorting the defense data and AI software company as part of a diversified portfolio.
Left is perhaps best known for being one of the short sellers whose bets against GameStop made him a handy foil for individual traders who rallied around the video game retailer’s shares back in 2021.
His issue with Palantir largely comes down to the company’s market valuation, which we — and many others — have previously spotlighted as downright absurd, dwarfing even the most optimistic valuations ever placed on tech giants, even those that actually became some of the greatest money machines in the history of capitalism.
But Palantir’s market multiples have only seemed to get more absurd, especially after it delivered a great Q2 earnings report earlier this month that received rave reviews from analysts.
Left acknowledged that valuation is a terrible tool for marking a turn in market prices, especially for a stock with this much retail participation and momentum behind it.
When asked why he thought he was right about shorting the stock, he admitted, “I’m probably not,” adding, “I mean, it could go higher. It’s part of being a short seller.”
Given the dynamics of stocks with heavy retail participation, where the online rallying cry of “squeeze the shorts” can generate a share and options buying binge that could inflict losses on a short, it does seem a bit strange for a short seller to be such an outspoken critic of such a popular company.
For the record, it might be worth taking some of Left’s public statements with a grain of salt.
In July 2024, he was indicted on multiple counts of securities fraud related to what federal prosecutors called a long-running “market manipulation scheme.” According to the indictment, “While Left made false representations to the public to bolster his credibility, behind the scenes, Left allegedly took contrary trading positions to reap quick profits off the stocks he either promoted or pilloried.”
Last month, Left’s legal request to dismiss the investigation — which argued he was the victim of selective prosecution by a government that sought to suppress his free speech rights — was denied.
That being said, the short seller also has some impressive career wins, including a short report on once-upon-a-time pharma juggernaut Valeant Pharmaceuticals that was followed by the shares losing over 90% of their value and the company ultimately changing its name.
