Wall Street tends to listen when Michael Burry (1) talks. The investor who became famous for predicting the 2008 housing collapse (he was played by Christian Bale in the 2015 Oscar-winning film, “The Big Short”) dropped a bombshell ahead of Palantir Technologies (2) (NASDAQ: PLTR) first-quarter earnings this week: he was shorting the stock, the company, the CEO — all of it.
“I would argue this is not just overvaluation. I am shorting the business model. I am shorting the entire premise upon which the company rests. I am shorting the CEO,” Burry wrote in a Monday Substack post (3).
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One day later, Burry got some support from Jeffries’ senior software analyst Brent Thill, who slapped Palantir with an “underweight” rating and a $70 price target (4) — implying roughly 46% downside from current levels — even after Palantir delivered 85% year-over-year revenue growth (5) in the quarter, its eleventh straight period of accelerating growth.
Burry noticed. “I saw Jefferies initiated with a price target of $70, and cited my thesis,” he wrote in a Tuesday Substack post (6). “Well, the analyst did not cite me, but the words sounded familiar.”
Why Jefferies says Palantir’s valuation requires a ‘heroic’ assumption
In a CNBC interview (7) on Tuesday, Jeffries’ Thill said his bearish call has nothing to do with Palantir’s actual business performance. The fundamentals, he said, are “exceptional.” The problem is what investors are paying for them.
Palantir’s market cap sits around $330 billion. Thill estimates the company will produce roughly $12 billion in revenue next year — putting the stock at about 31 times expected 2027 revenue, according to his note. Justifying that multiple, he wrote, requires a “heroic durability assumption.”
Thill compared Palantir to two other software darlings whose nosebleed multiples eventually collapsed.
“We watched Snowflake (8) at 50 times revenue go to 7. We watched Datadog (9) go from 30, 40 times to, you know, massively lower,” he told CNBC. By contrast, Amazon (10) and Alphabet currently trade at roughly 12 to 18 times EBITDA — a fraction of what Palantir bulls are paying.
That valuation gap helps explain why Palantir is down about 20% year to date even as Amazon has gained 20% over the same stretch, Thill noted. “PLTR has now delivered 11 consecutive quarters of growth acceleration, which is impressive but also makes the setup increasingly difficult,” he wrote in his note.
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Palantir’s Anthropic-sized problem
The other crack in the bull case, according to Thill, is competition — specifically a competitor that Palantir CEO Alex Karp (11) insists doesn’t exist.
“If you look at Anthropic (12), they just raced by them,” Thill said on CNBC. “If they do $12 billion next year, Anthropic’s on a $40 billion run rate. You look at, and say, well, wait a minute, like, why aren’t you investing in more salespeople? You’re letting your margin go to 60, but there’s no competition, but someone just passed you on the left side going 100 miles an hour.”
That posture leaves Palantir uniquely exposed if AI enthusiasm cools. “We believe PLTR remains vulnerable to any moderation in AI enthusiasm or even modest headline deceleration,” Thill wrote.
Palantir has other skeptics. Short-seller Andrew Left (13) of Citron Research and University of Florida finance professor Jay Ritter have both publicly bet against Palantir on similar valuation grounds, according to Business Insider (14).
Palantir did not immediately respond to Moneywise’s request for comment about the short positions. But for all the high-profile bears, the Wall Street consensus is still very much leaning the other way. Of the roughly 30 analysts tracked by TipRanks (15), about 18 rate Palantir a “buy” and only two — Jefferies among them — call it a “sell.”
The Street-high price target of $255 implies nearly 50% upside (16) from current levels. And the most aggressive bulls go even further, like Morgan Stanley’s Sanjit Singh and Keith Weiss, who laid out a bull-case scenario of $382 a share (17) — more than double recent prices — arguing that “Palantir is not only delivering the best growth in public company software, but also the best profitability in all of software.” Palantir’s Q1 numbers seem to give those bulls only more ammunition.
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Michael Burry’s Substack (1),(3),(6); Palantir (2),(5),(11); Motley Fool (4),(17); CNBC (7); Snowflake Investor Relations (8); Datadog Investor Relations (9); Amazon Investor Relations (10); Anthropic (12); Citron Research (13); Business Insider (14); TipRanks (15),(16)
This article originally appeared on Moneywise.com under the title: ‘I am shorting the business model… I am shorting the CEO’: Two top analysts just slapped Palantir with a ‘sell’ rating
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