According to CNBC, Palantir’s stock fell 7% on Tuesday despite the company reporting better-than-expected earnings and raising its full-year guidance. The software company beat both top and bottom line estimates and posted over $1 billion in revenue for the second consecutive quarter. The sell-off came as Wall Street analysts raised concerns about Palantir’s elevated valuation and “Big Short” investor Michael Burry revealed a short position against the company. During a CNBC “Squawk Box” interview, CEO Alex Karp called short sellers’ moves “market manipulation” and described their positions as “super triggering.” Karp defended Palantir’s performance, stating “we delivered the best results everyone, anyone’s ever seen.”
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The Valuation Conundrum
Here’s the thing about Palantir – they’re caught in that classic growth stock trap. The company is actually executing pretty well, beating expectations and growing revenue. But when you’re trading at sky-high multiples, even good news can disappoint if it’s not absolutely spectacular. Goldman Sachs analyst Gabriela Borges pointed out that Palantir stock is up 175% year-to-date, which means expectations were already baked into the price. Basically, when you’re that hot, you need to deliver blowout results just to stand still.
Karp’s Counterattack
Now, Alex Karp’s response to the short sellers is… well, it’s definitely not subtle. Calling it “market manipulation” is fighting words in the financial world. But is he right? Short selling is a legitimate market activity, though it does create downward pressure on stock prices. Karp seems to be arguing that the fundamentals don’t justify the bearish sentiment – and he’s got the earnings to back that up. The question is whether his aggressive rhetoric helps or hurts investor confidence long-term.
The AI Bubble Question
What’s really interesting here is how this ties into the broader AI narrative. Palantir has positioned itself as an AI powerhouse, and Karp himself commented that whether we’re in an AI bubble depends on whether GDP actually grows because of AI. That’s actually a pretty nuanced take in an industry full of hype. The company’s AI platform is central to their growth story, but if the AI revolution doesn’t translate into real economic growth, even strong execution might not justify current valuations.
What Comes Next
So where does Palantir go from here? They’ve got the revenue growth, they’ve got the AI story, but they’ve also got skeptical investors and a CEO who’s not afraid to pick fights. The stock reaction suggests that beating expectations isn’t enough anymore – they need to crush them. And with Michael Burry, who famously predicted the 2008 housing crash, now betting against them, the pressure’s really on. Can Palantir grow into its valuation, or is this the start of a broader reassessment of AI stocks? Honestly, your guess is as good as mine, but it’s definitely going to be interesting to watch.
