Palantir stock falls 20% in 6-day decline after short-seller report, enters bear country

Palantir shares have plummeted 20% from recent highs during a six-day losing streak, the longest such decline since April 2024, officially entering bear market territory. The artificial intelligence software company’s dramatic slide follows a broader market selloff and a critical short-seller report from Citron Research questioning whether the stock’s valuation reflects its actual fundamentals.

What happened: Palantir’s stock closed in correction territory Tuesday before sinking further into bear market status Wednesday after six consecutive days of heavy selling.

• Shares accumulated a 15% loss from highs before crossing the 20% threshold that defines bear market territory.
• This marks the company’s longest losing streak since April 2024, despite recently hitting record highs earlier this month.

The catalyst: Short-seller Andrew Left’s Citron Research published a report calling Palantir “detached from fundamentals and analysis.”

• Left argued that shares should be priced at $40 if compared to the same price-to-revenue multiple used in OpenAI’s recent $500 billion valuation.
• “Comparison is the enemy of happiness, and when measured against true AI leaders, Palantir’s price already reflects success beyond its fundamentals,” Left wrote.

Recent momentum: The company had been riding high on strong financial performance and AI-driven growth before the recent decline.

• Palantir posted its first $1 billion-revenue quarter earlier this month and exceeded Wall Street quarterly estimates.
• The company has secured major government contracts, including deals with the Department of Defense, capitalizing on the AI boom.
• This year alone, Palantir joined the ranks of the top 10 U.S. tech firms and became one of the 20 most valuable U.S. companies.

Valuation concerns: Despite the recent price drop, Palantir’s forward price-to-earnings ratio remains elevated at 193 times earnings.

• This valuation appears expensive compared to megacap technology peers, supporting concerns about the stock’s fundamental justification.
• The company joined the S&P 500 last year, cementing its status among major public companies.

What they’re saying: Left acknowledged the company’s achievements while questioning investor discipline.

• “Karp and his team should be proud. But for investors, that’s where discipline kicks in,” he stated in the report.