Why Is Palantir Technologies Stock Crashing This Week?

Core Viewpoint - Palantir's stock is experiencing a significant decline, down 15.1% amid a broader market sell-off, raising concerns about its extreme valuation despite recent earnings beats [1][2][4]. Group 1: Stock Performance - Palantir shares are down 15.1% as of Friday, coinciding with a 2.8% drop in the S&P 500 and a 4.6% drop in the Nasdaq-100 [1]. - The stock's decline is part of a larger sell-off of AI-related stocks, as investors grow cautious of high valuations [4]. Group 2: Earnings and Valuation - Palantir reported earnings that beat Wall Street expectations, but the results did not impress investors due to the company's extreme price-to-earnings (P/E) ratio of over 600 [2][4]. - The current valuation suggests that Palantir would need to grow its earnings tenfold to reach a more reasonable P/E level, which would still be nearly double that of Alphabet [6]. Group 3: Investor Sentiment - Michael Burry, known for his contrarian investment strategies, has taken a significant position against Palantir by purchasing 50,000 put contracts, indicating a belief that the stock will decline [3][7]. - The sentiment among investors is shifting, with increasing wariness about Palantir's valuation despite its recent earnings performance [7].