Palantir stock (NASDAQ: PLTR) nosedived 25% after reaching an all-time high in early November, triggering a fiery public clash between CEO Alex Karp and hedge fund manager Michael Burry.
Karp blamed short sellers for the stock’s drop, but many investors saw the decline as a correction to Palantir’s high valuation.
With a sales multiple of 102x, the highest in the S&P 500, the stock’s plunge sparked debate about whether Palantir’s premium pricing is justified or if critics’ doubts are valid.
The valuation reckoning & short seller showdown
Palantir’s astronomical valuation has long drawn skeptical fire from market bears.
At 102x sales with a 669 price-to-earnings ratio, the company trades at multiples that few software stocks have ever justified.
Michael Burry, the legendary investor who shorted subprime mortgages before the 2008 crash, revealed a massive short position: two-thirds of his $1.4 billion portfolio bet against Palantir through put options worth roughly $912 million.
Karp’s response? He went on CNBC and called the move “bat crazy,” accusing Burry and other short sellers of manipulating markets.
But here’s the catch: Karp himself has sold over $2 billion in Palantir stock in recent years, undercutting his defense.
When CEOs attack bears while quietly cashing out, retail investors often interpret it as a red flag rather than reassurance.
The dramatic 25% plunge suggests investors sided with the skeptics, viewing valuations as disconnected from reality rather than short-seller trickery.
The insider selling pattern & sustainability questions
Beyond Karp’s aggressive rhetoric lies a troubling pattern: massive insider selling.
Between 2023 and 2025, insiders sold $3.2 billion in shares, including $113 million from Karp alone.
Even more telling, in six months through mid-2025, insiders made 244 trades, with just one purchase and 243 sales.
This lopsided activity signals that leadership either doesn’t believe current valuations stick or is simply locking in windfall gains before the correction hits.
Palantir’s fundamentals remain genuinely strong. Revenue surged 63% year-over-year to $1.2 billion in Q3, and the company just won a $1.275 billion Department of Defense contract expansion.
The software works, and customers pay for it. Yet strong execution doesn’t justify any price.
Palantir trades at 102x sales today; even after a 66% collapse, it would still remain the most expensive stock in the S&P 500. That’s not a valuation floor, it’s a warning sign.
The question now: Is this 25% dip a temporary pullback before further gains, or the beginning of a brutal repricing? Karp’s combative tone hasn’t convinced skeptics.
Until Palantir’s valuation aligns with peers like Nvidia (24x earnings) or Microsoft (23.7x earnings), the stock remains vulnerable to more downside.
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