Palantir Stock Plummets 9% After Citron Research Calls It Overvalued
Short-seller's bearish report and a wider tech sector downturn pressure the AI software firm's high-flying shares.
Shares of Palantir Technologies plunged 9.4% on Tuesday following a critical report from short-seller Citron Research, which argued the data analytics company is severely overvalued and set a bearish price target of $40 per share.
The decline was exacerbated by a broader sell-off in the technology sector and reports of significant stock sales by Palantir's chief executive, Alex Karp. The move extends the stock's losing streak to five days, its longest since March, erasing a portion of the more than 150% gain it had registered since its lows in April.
Citron's founder, Andrew Left, asserted that Palantir's stock has become "detached from fundamentals." The report compared Palantir's valuation to that of OpenAI, suggesting that if Palantir traded at a similar price-to-sales multiple, its stock would fall closer to the $40 mark—a level Left described as "generous."
Investor anxiety was compounded by a general downturn in tech and AI-related stocks. The Technology Select Sector SPDR Fund (XLK) fell 1.7%, with industry giants like Nvidia and AMD seeing losses of 3.5% and 5%, respectively. This market rotation saw investors move toward more defensive sectors, including Healthcare and Real Estate.
Adding to the pressure, CEO Alex Karp has sold over $2 billion worth of Palantir stock throughout 2024 and 2025, according to a Forbes report, a move that contrasts with the buying activity of other tech executives during periods of growth.
The bearish sentiment comes despite a run of positive operational news for Palantir. The company recently reported its first-ever quarter with $1 billion in revenue, raised its full-year guidance, and secured a landmark $10 billion contract to consolidate its work with the U.S. Army. Still, analysts remain divided, with firms like Wedbush staying bullish while RBC Capital Markets has questioned the stock's "unsustainable" valuation, leaving investors to weigh the company's strong performance against mounting market skepticism.