Palantir Stock Plummets Amid CEO's Share Sale Plan and Pentagon Cuts
Washington, D.C., Thursday, 20 February 2025.
Palantir’s stock fell by 10% on February 19, 2025, after CEO Alex Karp announced a plan to sell 10 million shares, alongside anticipated 8% annual Pentagon budget cuts.
Market Impact and Stock Performance
Palantir Technologies (NASDAQ: PLTR) experienced a significant decline, closing at $112.06 on February 19, 2025, marking a 10.1% drop, with intraday losses reaching as high as 12.9% [1][3]. This decline is particularly notable as it contrasts with broader market performance, where the S&P 500 gained 0.2% on the same day [3]. Prior to this decline, Palantir’s stock had demonstrated remarkable performance, surging by approximately 47% year-to-date and an impressive 358% since February 2024 [2].
CEO’s Share Sale Plan Details
According to regulatory filings on February 18, 2025, CEO Alex Karp has implemented a new stock trading plan allowing for the sale of nearly 10 million shares, valued at approximately $1.1 billion, over the next eight months [1][3]. This new plan replaces a previous arrangement that had permitted the sale of nearly five times as many shares [3]. The timing of this announcement, coinciding with other market pressures, contributed to investor concerns [7].
Pentagon Budget Cut Implications
Adding to market pressures, Defense Secretary Pete Hegseth has ordered Pentagon officials to develop plans for cutting the defense budget by 8% annually over the next five years [1][2]. With the current defense budget at approximately $850 billion [1], these cuts could significantly impact Palantir, which has been awarded over $1.3 billion in defense contracts since 2009 [2]. The Pentagon’s budget reduction proposals are due by February 24, 2025 [1][2].
Company Fundamentals and Future Outlook
Despite the recent stock volatility, Palantir’s fundamentals show strong performance with reported revenue of $828 million for Q4 2024 and adjusted earnings of 14 cents per share [1]. However, the company’s valuation metrics indicate potential concerns, with a price-to-earnings ratio near 600-to-1 [1]. The company’s heavy reliance on government contracts, which constitute approximately 55% of its revenue [6], makes it particularly vulnerable to the proposed Pentagon budget cuts, though analysts suggest Palantir could benefit from the Trump administration’s focus on efficiency and AI implementation [7].