Palantir's Record Quarter Fails to Silence the Shorts: Burry, Valuation, and Regulatory Clouds Converge
04.06.2026 - 04:02:26 | boerse-global.de
The numbers are staggering. Palantir’s first-quarter revenue hit $1.633 billion, a year-over-year surge of 85%, with US commercial revenue alone rocketing 133% to $595 million. The company posted GAAP net income of $871 million and generated $925 million in adjusted free cash flow at a margin of 57%. Yet the stock is down roughly 14% year-to-date, while the S&P 500 has climbed over 11%. The disconnect between operational excellence and market sentiment has rarely been starker — and it just drew the attention of one of Wall Street’s most famous bears.
Burry reloads
Michael Burry, the investor who famously foresaw the 2008 housing crash, has renewed his short position against Palantir, calling the company a “sandcastle” built on temporary AI euphoria. In a recent Substack post, he pointed to a head-and-shoulders pattern on the chart, a technical signal that often precedes a trend reversal. Burry began building his short in autumn 2025 and has since extended it, holding put options with strike prices of $100 and $50, expiring in December 2026 and June 2027 respectively. His message was unequivocal: “I am not selling these today.”
The market took notice. On Wednesday, Palantir’s stock fell 5.5% in U.S. trading to around $151.82, while European-listed shares slid 4.75% to €123.06 in Frankfurt. It marked the third consecutive losing session, following declines of 5.3% and 2% in premarket trading.
The valuation metrics Burry cites are hard to ignore. The stock trades at a price-to-earnings ratio of roughly 160, though some calculations push it closer to 171. In his view, Palantir is changing hands at about 16 times its calculated intrinsic value — a level that leaves no margin for error.
Should investors sell immediately? Or is it worth buying Palantir?
Insiders and regulators add to the pressure
Burry’s attack arrives at a delicate moment. Over the past three months, company insiders have sold shares worth $422.5 million. A director recently offloaded a substantial block, following larger disposals by other executives earlier in the year. Such selling often raises flags about whether those closest to the business see the stock as fully valued.
Regulatory headwinds are also building, particularly in the UK. Britain’s Financial Conduct Authority (FCA) is reviewing its existing contract with Palantir amid concerns that the partnership could expose sensitive financial data to U.S. authorities. Separately, the Mayor of London blocked a planned agreement with the Metropolitan Police. For a company that derives a significant portion of its revenue from government contracts, these developments are more than a footnote.
The annual general meeting later today adds another layer. A shareholder proposal calls for a report on the human rights impact of Palantir’s software globally. Given the company’s dual-class share structure and founder control, the motion is expected to fail — but the very fact it reached the floor underscores the reputational scrutiny Palantir faces.
The growth engine still humming
Amid all the noise, Palantir’s underlying business continues to fire on all cylinders. U.S. government revenue rose 84% to $687 million, while the commercial segment outpaced even that. Management raised its full-year 2026 revenue guidance to between $7.650 billion and $7.662 billion, with U.S. commercial revenue now expected to exceed $3.224 billion — growth of at least 120%. Adjusted operating income is forecast at $4.440 billion to $4.452 billion, and adjusted free cash flow at $4.2 billion to $4.4 billion.
For the second quarter, Palantir targets revenue of $1.797 billion to $1.801 billion and adjusted operating income of $1.063 billion to $1.067 billion. The margin story remains central to the investment thesis.
Palantir at a turning point? This analysis reveals what investors need to know now.
Wall Street largely unmoved by the bear case
Analysts remain broadly bullish. Of the 31 covering the stock, 19 rate it a buy, 10 a hold, and only two a sell. The average price target of $183.73 implies upside of roughly 21% from current levels. But the stock now sits just above its 50-day moving average and about 11% below its 200-day average — and a full 30% below the 52-week high of €179.98.
Cboe’s plan to extend trading hours for selected single-stock options from July 13, 2026, could add further volatility. Palantir is expected to be among the roughly 20 names included, provided it meets criteria such as an average daily options volume of 150,000 contracts and a market cap above $50 billion. While fundamentals remain unchanged, the move may amplify short-term swings around earnings and macro events.
Palantir thus faces a clear test: its operational momentum is extraordinary, but the market’s willingness to pay for that momentum is fraying. Burry’s bet may be premature, but the combination of extreme valuation, insider selling, and regulatory friction gives even optimists reason to pause. The next quarterly report will need to deliver not just growth, but growth that justifies a price tag that leaves no room for disappointment.
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