The first unwind of the market’s favorite 2025 trade begins.
Shares of Palantir (PLTR) plunged 10% to $112 on Wednesday following a one-two punch of negative news. Shares lost another 2% in premarket trading on Thursday, and the company’s ticker page was the most active on the Yahoo Finance platform.
First, the company revealed late Tuesday that outspoken co-founder and CEO Alex Karp adopted a 10b5-1 trading plan for the maximum sale of 9.975 million shares of Class A common stock. The trading arrangement will last until Sept. 12, 2025.
A plan of this kind allows insiders of public companies to set up a schedule to sell shares in the company over a period of time.
The disclosure sent a signal to the bulls that perhaps Karp views the stock as overvalued following a blistering 58% run-up this year prior to Wednesday’s slide.
Other Palantir insiders have also been aggressively selling stock too, according to Yahoo Finance data.
Meanwhile, CNN reported that new Defense Secretary Pete Hegseth has ordered an 8% annual cut in defense spending for the next five years. This is a potential blow to Palantir, which relies heavily on government contracts. The stock’s recent surge had been driven, in part, by expectations that the Trump administration would ramp up defense spending.
But amid all the buzz, Palantir quietly raised fresh red flags in its annual report — the same day Karp unveiled his new stock trading plan.
One, Palantir’s headcount grew by just 5% in 2024 after declining 3% in 2023. Over the past two years, the company has added only 98 employees, according to Jefferies tech analyst Brent Thill.
Second, on Feb. 12, the company’s chief accounting officer, Heather Planishek, announced her decision to step down effective Feb. 24. The company’s CFO, David Glazer, will assume her responsibilities on an interim basis.
And three, Palantir continues to overly rely on its biggest customers for business — its top three customers accounted for 17% of revenue in 2024.
The news flow this week is a dent in the Teflon trade that had become Palantir this year.
The company reported on Feb. 3 that fourth quarter US revenue surged 52% from the prior year. Sales to commercial and government clients rose 64% and 45% year over year, respectively. Adjusted operating profit margins soared to 45% from 34% a year ago.
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Adjusted operating profits almost doubled in 2024 to $1.13 billion.
Since Palantir reported results, Yahoo Finance data shows there have been several upward revisions to earnings per share expectations for 2025 and 2026 by Wall Street analysts.
