- Palantir‘s (PLTR) stock has dropped a massive 36% from its Feb. 18 peak of $125.41, hitting $80.40 in premarket trading on Friday after a 5.24% decline, driven by waning retail investor interest and insider sales, including CEO Alex Karp’s plan to sell up to 9.975 million shares by Sept. 12, 2025.
- Retail purchases have plummeted since early February, with Vanda Research identifying Palantir as highly vulnerable to a momentum unwind, while insider selling has fueled perceptions of an overvalued stock following a 240% year-over-year surge.
- Potential U.S. defense budget cuts of 8% annually over five years, as reported by The Washington Post, threaten Palantir’s significant defense contracting revenue, reversing earlier expectations of increased spending under the Trump administration.
Palantir Technologies (PLTR), a $198.82 billion market cap company, has seen its stock price take a significant hit recently, with shares dropping $4.44 or 5.24% to $80.40 in premarket hours on Friday, following a 5.08% decline in the previous session that left the stock closing at $84.77. This comes after the stock reached a record high of $125.41 per share on February 18, representing a 36% plunge in just ten days. The company, known for its data analytics and AI-driven solutions, appears to be facing a confluence of challenges that have shaken investor confidence, particularly among its core retail investor base.
Retail investors, who have long been Palantir’s most ardent supporters, seem to be stepping back from the stock. Data from Vanda Research, as reported by YF, indicates that retail purchases of Palantir stock have plummeted since early February, a stark contrast to the peak in mid-January when momentum traders propelled the stock upward. Marco Iachini, senior vice president at Vanda Research, highlighted Palantir as potentially the most vulnerable among top retail-traded stocks, noting that a loss of retail momentum could trigger a significant unwind. This shift in sentiment among individual investors, who were drawn to Palantir’s growth narrative and its high-profile contracts, may be amplifying the stock’s downward pressure.
Adding to the unease, insider activity at Palantir has raised eyebrows. The company disclosed this month that co-founder and CEO Alex Karp adopted a 10b5-1 trading plan, allowing for the sale of up to 9.975 million shares of Class A common stock through September 12, 2025. Such plans are routine for insiders to manage personal finances without running afoul of securities laws, but the timing and scale of Karp’s plan – following a 240% year-over-year surge in the stock price – have led some to speculate that he may see the stock’s valuation as overstretched. Other Palantir insiders have also been actively selling shares, according to Yahoo Finance data, further fueling perceptions that those closest to the company might be cashing out at what they perceive as a peak.
External pressures are also at play. A report from The Washington Post suggests that the U.S. Department of Defense, a key client for Palantir, is bracing for budget cuts under Defense Secretary Pete Hegseth. The Pentagon has reportedly been instructed to prepare for an 8% annual reduction in its budget over the next five years. Given Palantir’s deep ties to defense contracting – its software is widely used for intelligence analysis and military applications – this development could threaten a significant revenue stream. The stock’s earlier rally was partly fueled by expectations of increased defense spending under the Trump administration, making this potential pivot a jarring reversal for investors who had banked on a more militarized federal budget.
Palantir’s business model, which blends government contracts with commercial growth, has long been a point of fascination. Its ability to secure high-value deals with agencies like the Department of Defense and expand into private-sector clients has driven its valuation to lofty heights. However, the current sell-off underscores the risks of relying heavily on a retail investor base prone to swift shifts in sentiment, as well as the uncertainties tied to government spending priorities. The 36% drop from its February 18 peak of $125.41 reflects not just profit-taking but a broader reassessment of the stock’s fundamentals in light of these headwinds.
For now, Palantir finds itself at a crossroads. The stock’s decline from $84.77 to $80.40 in premarket trading signals ongoing volatility, and the combination of insider sales, fading retail enthusiasm, and potential defense budget cuts paints a complex picture. Investors will likely be watching closely to see whether the company can regain its footing or if this marks the beginning of a more sustained correction for a stock that, until recently, had been a darling of the market.
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