TLDR
- Palantir (PLTR) fell 16% in November, its worst monthly drop in over two years
- Valuation concerns drove the selloff, with shares trading at 233 times forward earnings
- Michael Burry disclosed a short position, prompting CEO Alex Karp to call it “market manipulation”
- The broader AI sector faced pressure as investors worried about a bubble
- Wall Street analysts remain split with a Hold consensus rating on the stock
Palantir Technologies saw shares plunge 16% in November. The drop represented the data analytics company’s worst monthly performance since August 2023.
Palantir Technologies Inc., PLTR
The selloff came as investors retreated from AI stocks. Concerns about inflated valuations and a potential bubble drove the selling pressure across the sector.
The month began positively for Palantir. The company exceeded Wall Street’s third-quarter earnings and revenue expectations. Revenue topped $1 billion for the second straight quarter.
However, the post-earnings momentum quickly faded. Multiple Wall Street firms questioned the company’s valuation metrics.
Analysts Raise Valuation Red Flags
Jefferies called Palantir’s valuation “extreme” in a client note. The firm suggested investors consider Microsoft and Snowflake instead. Deutsche Bank analysts said the price levels were “very difficult to wrap our heads around.”
RBC Capital Markets pointed to concerns about the company’s “increasingly concentrated growth profile.” Even after November’s decline, Palantir trades at 233 times forward earnings.
By comparison, Nvidia trades at approximately 38 times forward earnings. Alphabet sits at around 30 times.
Michael Burry Takes Short Position
The selloff accelerated when Michael Burry revealed a short bet against Palantir. The investor, famous for predicting the 2008 housing crisis, also disclosed positions against Nvidia.
CEO Alex Karp responded forcefully to Burry’s move. He made two appearances on CNBC within one week. Karp accused Burry of “market manipulation” and called his actions “egregious.”
“The idea that chips and ontology is what you want to short is bats— crazy,” Karp said on CNBC’s “Squawk Box.”
In a shareholder letter, Karp defended the company’s valuation. He argued Palantir offers individual investors returns previously “limited to the most successful venture capitalists in Palo Alto.”
Broader AI Sector Weakness
Palantir’s struggles reflected wider pressure on AI stocks. Nvidia dropped more than 12% during November. Microsoft and Amazon each fell approximately 5%.
Quantum computing stocks suffered steeper losses. Rigetti Computing and D-Wave Quantum shed over a third of their value.
Apple and Alphabet were the only Magnificent 7 stocks to post November gains.
Palantir announced several deals during the month. The company signed a multiyear contract with PwC for AI adoption in the U.K. It also secured an agreement with aircraft maintenance firm FTAI.
However, these announcements failed to offset valuation concerns. Wall Street remains divided on the stock. Among 16 analysts, three recommend buying, 11 rate it a hold, and two suggest selling.
The average analyst price target stands at $187.87. This implies potential upside of roughly 11% from current levels.
The post Palantir (PLTR) Stock: CEO Defends Company as Critics Pile On appeared first on Blockonomi.
Source: https://blockonomi.com/palantir-pltr-stock-ceo-defends-company-as-critics-pile-on/