Why Palantir Stock Is Plummeting Today
Key Points
Palantir stock is moving lower following recent comments from Michael Burry.
Burry thinks Palantir's valuation could be in a bubble and thinks the company is losing ground to Anthropic.
Anthropic could be gearing up for an IPO in the near future.
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Palantir (NASDAQ: PLTR) stock is getting hit with another big round of sell-offs Thursday. The artificial intelligence (AI) software company's share price was down 7.4% as of 11 a.m. ET.
Palantir's valuation is moving lower today in response to recent comments from "Big Short" investor Michael Burry. The stock is also under pressure as investors weigh the potential implications of an initial public offering (IPO) from another big player in the AI space.
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Burry's recent comments are weighing on Palantir
After engineering hugely successful trades connected to the subprime mortgage crisis, Michael Burry has a lot of credibility when it comes to calling bubbles. Burry recently indicated that he thinks Palantir's valuation could be in a bubble, and he also said that Anthropic is "eating the company's lunch."
While Palantir and Anthropic are partners, they also have competitive overlaps. If Anthropic continues to rapidly gain ground in the AI market, it could pose a threat to Palantir. Adding another valuation pressure, Anthropic is said to be considering going public soon -- a development that could shift some investment dollars away from Palantir.
What's next for Palantir?
Palantir has one of the most growth-dependent valuation profiles of any large tech company on the market and is valued at roughly 93 times this year's expected earnings even after recent pullbacks. The company has been able to command a substantial valuation premium thanks to its stellar sales growth and margins and the belief that the business has a solid competitive moat in its corner of the AI market. While Palantir's long-term outlook still appears promising, the stock could see strong valuation pressures if Anthropic successfully moves in on its turf.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
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