Investors stunned as Palantir erases all gains, $60 billion market cap swing in hours - what really happened?

Palantir stock today: Palantir Technologies sent shockwaves through Wall Street on Tuesday after its stock plunged as much as 8.1% in premarket trading, wiping out tens of billions in market value in just hours, as per a report. The sharp drop came despite the company reporting another blowout quarter that beat analyst expectations and raising its full-year revenue forecast.

Palantir Stock Fell After Record-Breaking AI Rally

The selloff reflected growing investor unease over Palantir’s soaring valuation. The stock had surged more than 170% this year, closing at a record high just a day earlier, as per a Bloomberg report. As of Friday, the company traded at a price-to-sales ratio of 85, the highest in the entire S&P 500 Index.

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Why Palantir’s Valuation Sparked Investor Panic

Gil Luria, an analyst at D.A. Davidson, said in an interview with Bloomberg Television, “All these numbers are completely disengaged from fundamentals,” adding, “This is a company with a $4 billion run rate that’s growing 63%. There’s nothing even remotely close to that, which is how we got to the situation where the valuation is at unprecedented levels,” as quoted in the report.

Michael Burry Bets Big Against Palantir and Nvidia

Adding to the tension, “Big Short” investor Michael Burry disclosed fresh bearish bets against Palantir and fellow AI leader Nvidia in his firm’s latest 13F filing, as per the Bloomberg report. Burry’s Scion Asset Management bought put options, contracts that gain value as shares fall, signaling a contrarian stance against the AI boom.

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Palantir’s Third-Quarter Earnings Beat Wall Street Expectations

This comes after Palantir’s third-quarter results showed revenue climbing 63% to $1.18 billion, beating Wall Street estimates of $1.09 billion. The company forecast $1.33 billion in sales for the current quarter, again ahead of analyst projections. It also posted adjusted earnings of 21 cents per share, topping expectations of 17 cents.

Palantir’s CEO Alex Karp didn’t shy away from the frenzy surrounding his company. “We are in a nosebleed zone,” he told Bloomberg. “No one else is here.” In a letter to investors, Karp defended the company’s rapid rise to a $488 billion valuation, writing that its success “has confounded most financial analysts and the chattering class, whose frames of reference did not quite anticipate a company of this size and scale growing at such a ferocious and unrelenting rate," as quoted by Bloomberg.

Still, analysts noted that investors were hoping for more clarity about Palantir’s outlook beyond 2025. Bloomberg Intelligence’s Mandeep Singh, “I think everyone wanted some sense of 2026," as quoted in the report.

Palantir’s US commercial sales jumped 121% year-over-year to $397 million, while government revenue rose 52% to $486 million. The company’s growth continues to be strongest in the US, though Karp admitted that Europe remains a “stagnant” market.

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Alex Karp Responds to Market Selloff and Valuation Concerns

Despite the market selloff, Karp struck an optimistic tone on the call with investors, saying, “By any normal or even reasonable standard, these are not normal results. These are not even strong results,” adding, “These are arguably the best results that any software company has ever delivered," as quoted in the report.

FAQs

Why did Palantir’s stock drop despite strong earnings?

Investors are worried about its high valuation, which some analysts say is disconnected from fundamentals.



How much has Palantir’s stock gained this year?

The stock is still up more than 170% year-to-date, despite the recent drop.