Palantir soars, then tumbles in flurry following Musk tweet

Shares of Palantir were the most heavily traded issue in the S&P 500 by midday, with roughly 115 million changing hands in a volatile session for the retail stock-trading favorite.

The stock was up more than 8% in the premarket session, attracting attention from online traders after Elon Musk spotlighted comments from Palantir CEO Alex Karp at a California defense-industry conference, the Reagan National Defense Forum, held over the weekend.

It’s unclear precisely what aspect of Karp’s comments Musk found “based,” an online term indicating something morally righteous but potentially unpopular. They included several rapid-fire asides, including an assertion that the United Nations is “basically a discriminatory institution against anything good.”

He also said that he believed part of the reason Democrats lost the recent presidential election was that “people want to live in peace. They want to go home. They do not want to hear your woke pagan ideology. They want to know they’re safe.”

At any rate, online Palantir cheerleaders clearly see the chance the prominence of billionaire tech businessmen like Musk — who spent more than $250 million to elect Trump and Republicans — could translate into more money and opportunity for companies like Palantir.

Palantir was cofounded by billionaire tech investor Peter Thiel, a former employer of incoming Vice President JD Vance and a key contributor to Vance’s political rise. (Here’s a good Washington Post piece on the connections.)

“Time to see what else Peter Thiel is backing and start buying,” one commenter wrote on a popular subreddit following Palantir shares.

Palantir has been on a tear for quite some time. The shares rose after Hamas’ October 7 attack on Israel led to the war in Gaza, thanks in part to the company’s close ties to the Israeli defense establishment.

After joining the S&P 500 in September, it is the best-performing stock in the index, rising more than 320% this year and overtaking previous 2024 leaders Vistra (+280%) and Nvidia (+180%).

Those gains have created enormous amounts of wealth on paper — Palantir’s market cap is now roughly $165 billion — and also made it one of the most richly valued stocks in the S&P 500, with a price-to-sales ratio of nearly 50 and a price-to-next-12-months’ earnings ratio of nearly 160.

Such nosebleed levels of valuation essentially mean the stock price is highly dependent on continued and persistent euphoria from shareholders until actual sales and profits start to show up to justify the price. And that is by no means a sure thing. Case in point, after opening up about 6%, Palantir suddenly sputtered out, and shortly after 1 p.m. was down 5% as part of a broader drubbing of momentum stocks.