According to CNBC, Palantir’s stock dropped 7% on Tuesday as Wall Street analysts raised valuation concerns and “Big Short” investor Michael Burry revealed a short position against the company. CEO Alex Karp went on CNBC’s “Squawk Box” and ripped into short sellers, calling their moves “market manipulation” and describing the positions as “super triggering.” Despite the stock decline, Palantir actually delivered strong results with both revenue and earnings beating expectations, marking their second straight quarter with revenues topping $1 billion. The company also lifted its full-year guidance, but Goldman Sachs analyst Gabriela Borges noted the “muted stock reaction” comes amid “high expectations” and the stock’s massive 175% year-to-date gain.
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<h2 id="karp-temper”>Karp’s Temper Tantrum or Valid Defense?
Here’s the thing about Alex Karp’s outburst – it’s classic Karp. He’s never been one to shy away from confrontation, and calling short sellers “market manipulators” certainly gets headlines. But is he right? Or is this just what CEOs say when their stock gets hit?
Look, Palantir did deliver solid numbers. Beating expectations and raising guidance should normally be celebrated. But when your stock has already run up 175% this year alone, perfection gets priced in. Basically, anything less than spectacular gets punished. And Karp’s emotional response might actually be making investors more nervous rather than reassuring them.
The Valuation Reality Check
Let’s talk about the elephant in the room – Palantir’s valuation has been absolutely insane. Trading at nosebleed multiples even before this year’s run-up, the stock was practically begging for a reality check. Michael Burry spotting this isn’t exactly shocking – he made his name betting against overvalued assets.
What’s interesting is that even Goldman Sachs, which has been generally positive on Palantir, acknowledged the “high expectations” problem. When you beat revenue by 7% last quarter and the market yawns this quarter, that tells you everything about how much optimism was already baked into the price.
The AI Bubble Question
Karp also weighed in on the AI bubble debate during his CNBC appearance, suggesting it depends on whether GDP actually grows because of AI. That’s a pretty convenient position for someone whose company is riding the AI wave hard. Palantir has been positioning itself as an AI powerhouse, and the stock’s incredible run this year is largely tied to that narrative.
But here’s my question: if we’re in an AI bubble, and Palantir is one of the poster children, shouldn’t we expect some volatility? Karp can’t have it both ways – you can’t hype the AI revolution and then get mad when people bet against your inflated valuation.
What Happens Next?
The real test will be whether this is just a blip or the start of something bigger. Palantir’s business fundamentals remain strong, but stock prices are about expectations versus reality. When expectations get this elevated, reality often disappoints.
Karp’s fighting words might rally the faithful temporarily, but they don’t change the math. If Palantir can continue delivering blowout quarters, the short thesis collapses. But if growth slows even slightly at these valuation levels? Well, let’s just say Michael Burry might be onto something.
