Palantir Technologies (PLTR) shares plunged into bear market territory on Wednesday after experiencing six consecutive days of declines, marking the longest sustained downtrend for the artificial intelligence software company since April 2024. The recent slide has erased roughly 20% of the stock’s value from its record highs earlier this month, and shares closed in correction territory Tuesday after accumulating a 15% loss from those peak levels.
The decline comes amid a broader sell-off in technology stocks, reflecting a sector rotation away from high-growth AI names, and was further fueled by a scathing report from short seller Andrew Left’s Citron Research. In the report, Left described Palantir as “detached from fundamentals and analysis,” arguing that, if measured on the same price-to-revenue multiple used to value OpenAI’s recent $500 billion market capitalization, Palantir shares should be priced around $40. Left added, “Comparison is the enemy of happiness,” acknowledging the company’s achievements while cautioning investors that the current stock price already reflects success beyond its underlying fundamentals.
Earlier this month, Palantir had soared to new heights after reporting its first $1 billion-revenue quarter, significantly surpassing Wall Street estimates. The company has been a major beneficiary of the artificial intelligence boom, leveraging its AI-driven analytics platform to secure government contracts, including partnerships with the Department of Defense, and commercial clients across multiple industries. These achievements helped the company break into the top 10 U.S. tech firms by market value and place among the 20 most valuable U.S. companies. Palantir also became a member of the S&P 500 last year, cementing its status as a mainstream tech player.
Despite these strong fundamentals and growth milestones, valuation remains a concern. The company’s forward price-to-earnings ratio stands at a staggering 193 times, making it one of the most expensive stocks in its peer group. Analysts note that while Palantir’s long-term growth potential is supported by its AI leadership, government contracts, and expanding commercial footprint, the stock’s lofty multiple exposes investors to downside risk during periods of market volatility.
Some investors also point to the rapid rise in Palantir’s stock over the past year as a reason for caution. The combination of high expectations, sector-wide tech weakness, and skepticism from short sellers has created pressure on the stock, prompting the current correction. However, many market observers remain optimistic about Palantir’s strategic positioning, particularly as AI adoption accelerates across government and corporate sectors.
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