Shares of Palantir Technologies (PLTR) tumbled 10% to $112 on Wednesday following a wave of negative news, extending losses by another 2% in premarket trading on Thursday. The stock was among the most actively watched on Yahoo Finance, reflecting investor unease.
CEO Alex Karp’s Stock Sale Raises Red Flags
Palantir’s co-founder and CEO, Alex Karp, revealed late Tuesday that he had adopted a 10b5-1 trading plan to sell up to 9.975 million shares of Class A common stock by September 12, 2025. This type of trading plan allows corporate insiders to sell shares at predetermined intervals, but the announcement sparked concerns among investors.
Karp’s decision comes after Palantir’s stock soared 58% year-to-date, prompting speculation that he may see shares as overvalued. According to Yahoo Finance data, other Palantir insiders have also been aggressively selling shares, adding to the bearish sentiment.
Defense Spending Cuts Threaten Government Contracts
Adding to Palantir’s woes, CNN reported that new U.S. Defense Secretary Pete Hegseth has ordered an 8% annual cut in defense spending for the next five years. This could be a major setback for Palantir, as the company heavily relies on government contracts.
Palantir’s recent stock surge had been fueled by expectations that the Trump administration would increase defense spending. With this new development, investors are re-evaluating the company’s growth prospects.
Other Warning Signs in Palantir’s Annual Report
Beyond the CEO’s stock sale and defense spending cuts, Palantir quietly raised additional red flags in its latest annual report:
- Slowing Workforce Growth – Palantir’s headcount increased by only 5% in 2024 after shrinking 3% in 2023. Over the past two years, the company has added just 98 employees, according to Jefferies analyst Brent Thill.
- Accounting Officer Resignation – On Feb. 12, Palantir’s Chief Accounting Officer, Heather Planishek, announced she would step down effective Feb. 24. CFO David Glazer will assume her responsibilities on an interim basis.
- Customer Concentration Risk – Palantir continues to rely heavily on its largest clients, with its top three customers accounting for 17% of revenue in 2024.
Strong Financials Keep Bulls Hopeful
Despite the negative headlines, Palantir has delivered impressive financial results. In its Q4 earnings report, the company reported:
- U.S. revenue surged 52% year-over-year
- Commercial sales jumped 64%, while government sales grew 45%
- Adjusted operating profit margins increased to 45% (up from 34% a year ago)
- 2024 adjusted operating profits nearly doubled to $1.13 billion
Since its earnings report, several Wall Street analysts have raised their EPS estimates for 2025 and 2026, according to Yahoo Finance data. Over the past year, Palantir shares have skyrocketed 358%.
Final Thoughts: Is Palantir Still a Buy?
While Palantir remains on a strong growth trajectory, concerns over insider selling, defense budget cuts, and customer concentration risks have rattled investors. Still, with robust earnings and bullish Wall Street sentiment, the long-term outlook remains a hot debate.
Would you still bet on Palantir stock despite the recent dip? Let us know in the comments!
