{"id":104607,"date":"2025-02-23T05:20:35","date_gmt":"2025-02-23T05:20:35","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/veteran-fund-manager-sounds-alarm-on-palantirs-problems\/"},"modified":"2025-02-23T05:20:35","modified_gmt":"2025-02-23T05:20:35","slug":"veteran-fund-manager-sounds-alarm-on-palantirs-problems","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=104607","title":{"rendered":"Veteran fund manager sounds alarm on Palantir\u2019s problems"},"content":{"rendered":"


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In three days, Palantir has shed $50 billion in market capitalization.<\/p>\n

On Feb. 19, Palantir stock fell by 10.1% on news of Pentagon budget cuts and CEO Alex Karp’s stock sale plan. The stock lost another 5.2% and 4.6% in the following two sessions.<\/p>\n

\ud83d\udcb0 <\/strong>Stay ahead of the markets: Subscribe to TheStreet’s free daily newsletter<\/strong><\/a>\ud83d\udcb8<\/strong><\/p>\n

Palantir Technologies\u00a0 (PLTR<\/a><\/strong>) <\/span>\u00a0is mainly known for providing AI-driven software to the U.S. military and government.<\/p>\n

In early February, the company reported a fourth-quarter beat and offered better-than-expected guidance for Q1, which led to a 23% surge during the following trading session.<\/p>\n

Palantir surged 340% in 2024 and was the top performer in the S&P 500 for the year. The stock is trading at a forward price-to-earnings multiple of 178.57, while the number for Nvidia\u00a0 (NVDA<\/a><\/strong>) <\/span>\u00a0is 31.45, according to Yahoo Finance’s data. This means Palantir stock is much more expensive than\u00a0even the most dominant AI company.<\/p>\n

Given Palantir\u2019s sharp surge and high valuation, key client’s budget cuts and the CEO’s stock sale plan have raised concerns about potential weakness. <\/p>\n

Wall Street expects more downside for the stock. Analysts have an average price target of $85.11 for Palantir, implying a 16% drop from Friday\u2019s close.<\/p>\n

Meanwhile, fund managers are already selling.<\/p>\n

Adam Turnquist, LPL Financial\u2019s Chief Technical Strategist, analyzed the 13-F filings of U.S. hedge funds and found that managers have slashed holdings in Palantir, reducing allocations by 28.8 million shares in Q4 2024.<\/p>\n

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Palantir closed at $101.35 on Feb. 21 and remains up 34.85% year-to-date, despite the recent sell-off.<\/p>\n

Tasos Katopodis&sol;Getty Images<\/a><\/p>\n<\/figcaption><\/figure>\n

Veteran fund manager criticized Alex Karp\u2019s recent interview<\/h2>\n

Palantir co-founder and CEO Alex Karp showed up on CNBC on Feb. 18. He talked about the new book \u201cThe Technological Republic\u201d he co-authored, his thoughts on President Trump, Elon Musk, and more.<\/p>\n

Karp said, \u201cWe are in a software-defined world, and the nation that leads software is the U.S.A.\u201d<\/p>\n

Related: Veteran stock trader’s latest Palantir move turns heads<\/a><\/strong><\/p>\n

Doug Kass, a longtime hedge fund manager, criticized Karp’s recent CNBC appearance. He said it \u201cwas nothing more than some \u2018double talk\u2019 and a bunch of softball questions from complicit moderators.\u201d<\/p>\n

Kass\u2019s career dates back to the 1970s at Putnam and includes a stint as director of research at billionaire Leon Cooperman’s Omega Advisors.<\/p>\n

\u201cThe Karp interview reminded me of CNBC’s pathetic interview of Sam Bankman-Fried, weeks before it was discovered his company, FTX, was a Ponzi scheme,\u201d Kass said.<\/p>\n

He explains that he is not suggesting that Palantir is a Ponzi scheme at all, but rather, he is disappointed with Karp\u2019s interview because it lacks \u201cmeaningful and value-added\u201d content. <\/p>\n

Kass correctly anticipated Palantir’s fall. He said he had a short position in Palantir and covered during the recent sell-off.<\/p>\n

Analysts mixed on Palantir stock<\/h2>\n

Several analysts have updated their views on Palantir after the sell-off.<\/p>\n

Wedbush analyst Daniel Ives reiterated an outperform rating and a $120 price target, calling the sell-off a buying opportunity.<\/p>\n

“Palantir\u2019s unique software approach positions it to gain more IT budget dollars at the Pentagon, not less. The company is well suited for this new disciplined spending environment, and as defense programs are reevaluated, Palantir could secure a larger role in government IT spending,” the analyst said.<\/p>\n

“We believe Palantir is on track to become the next Oracle or Salesforce, potentially reaching a $1 trillion market cap in the coming years,” he added.<\/p>\n

However, William Blair analysts led by Louie DiPalma reiterated their underperform rating, Barron’s reported.<\/p>\n

The analyst said Palantir\u2019s U.S. government business experienced a pronounced revenue deceleration in 2021 and 2022, and \u201cthere is high risk of this happening again.\u201d<\/p>\n

Fund manager buys and sells:<\/strong><\/p>\n