Palantir Stock Drops 16.5% in Five Days Amid Valuation Concerns

Palantir Technologies Inc. ($PLTR) has experienced a significant downturn, with its stock plummeting 16.5% over the past five days, marking its steepest five-day decline since April 2025. This sharp fall comes despite the data analytics software company reporting strong second-quarter earnings, as investors grapple with concerns over its high valuation and recent short-seller commentary.

The recent sell-off has been significantly influenced by prominent short-seller Andrew Left of Citron Research. Left asserted that Palantir's stock has become "detached from fundamentals," suggesting a fair value of $40 per share. He drew comparisons to OpenAI, arguing that even at a lower price point, Palantir would remain historically expensive for a software-as-a-service company.

Despite the stock's decline, Palantir delivered robust financial results for the second quarter of 2025, with revenue reaching $1.004 billion, surpassing Wall Street's forecast of $987 million, and earnings per share of $0.16. CEO Alex Karp addressed skeptics following the earnings report, stating that they "have been bent into a kind of submission."

However, investors appear to be prioritizing the company's lofty valuation metrics, with forward price-to-sales multiples ranging from 80x to 155x and a forward P/E ratio as high as 700x. Analysts from Jefferies and HSBC have also voiced concerns, noting that the stock's valuation is "disconnected from even optimistic growth scenarios" and that it might be "priced for perfection."

The market's reaction also reflects broader dynamics, including profit-taking after Palantir's stock surged over 130% year-to-date in 2025. Macroeconomic factors, such as inflation concerns and geopolitical developments like potential resolutions to conflicts, may also be contributing to the pressure on the stock, given Palantir's significant exposure to government contracts.

"BREAKING: Palantir, $PLTR, is now down -16.5% in 5 days, marking its steepest 5-day decline since April 2025," stated The Kobeissi Letter on social media, highlighting the rapid depreciation.

The current situation presents a complex picture for Palantir, balancing its strong operational performance and AI-driven growth potential against market skepticism regarding its valuation and the broader economic landscape.