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.
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