Why Palantir is on its worst run since May 2022
The stock opened sharply lower Monday, putting it on track for four straight daily losses. Its gains for the year have more than halved.
The market’s jitters around Palantir Technologies continue.
Until recently, the data analytics and AI software company was the best-performing stock in the S&P 500 this year, after winning the title last year with a remarkable 340% gain.
But reports last week that the Trump administration is planning sharp cuts in defense spending have whacked the shares soundly. (The US government is Palantir’s single largest customer.) The decline eroded Palantir’s 2025 gains by nearly 65%, down to less than 25% as of early trading Monday.
The stock is down more than 25% over the last four trading sessions, its worst four-day run since posting a weak earnings report in May 2022.
The most vocal Palantir supporters have largely shrugged off the recent decline. Wedbush analyst Dan Ives, a Palantir bull, wrote that the worries about Pentagon cuts are totally wrong:
“This is exactly the opposite how we believe these DOD cuts will play out as in our view Palantir’s unique software approach will enable the company to gain MORE IT budget dollars at the Pentagon....not less despite these initial knee jerk reactions from the Street.”
Maybe, but it wasn’t just the sound of the swinging ax at the DOD that got investors’ attention.
The market also seems to have noticed that Palantir’s bombastic CEO, Alex Karp, has been selling a ton of stock lately. Analyst Brent Thill of Jefferies wrote in January that Karp had sold roughly 42 million shares of stock for about $2 billion over the previous five months.
On Friday, as part of the company’s annual report, it disclosed a new stock sale plan for Karp. Such plans are meant to remove the appearance of insider trading by executing stock sales based on preset triggers. The new plan would allow Karp to sell nearly 10 million shares of stock through September 2025. At the current price of roughly $92 a share, that would equate to about $920 million worth.
No one knows if this is just a passing squall or if Palantir’s remarkable run — before the current sell-off started, it was up 1,400% over the last two years — might finally be over. But the big moves shouldn’t be too much of a surprise, as the nosebleed valuations the stock carries make it vulnerable to price swings based on shifts in sentiment rather than underlying fundamentals.
