Palantir Technologies Inc. Faces Stock Price Drop Amid Defense Budget Cuts and CEO Share Sale
Palantir Technologies Inc. (PLTR) experienced a significant stock price drop on Wednesday, falling as much as 12% during the trading session and extending losses in after-hours trading. The decline followed two key developments: a report by The Washington Post indicating potential U.S. defense budget cuts and a regulatory filing revealing CEO Alex Karp’s plan to sell nearly 10 million shares over the next six months.
According to The Washington Post, Defense Secretary Pete Hegseth has directed senior Pentagon leaders to prepare for annual defense budget cuts of 8% over the next five years. This news raised concerns among investors, as Palantir derives more than 40% of its revenue from U.S. government contracts, particularly in defense and intelligence sectors. The company, known for its artificial intelligence and data analytics platforms, has been a major beneficiary of government contracts in recent years.
The stock’s decline was further exacerbated by Karp’s share sale plan, disclosed in a regulatory filing late Tuesday. The CEO’s decision to sell a significant portion of his holdings added to investor unease, especially after Palantir’s shares had reached record highs earlier in the week. The stock closed at $112.06, down 10% for the day, and continued to slide in after-hours trading.
Despite the recent downturn, Palantir remains one of the top-performing U.S. stocks over the past year, with shares nearly quintupling in value. The company reported strong fourth-quarter 2024 earnings, with $828 million in revenue and adjusted earnings of 14 cents per share. Analysts have noted that while defense budget cuts could pose challenges, Palantir’s focus on efficiency and AI-driven solutions may position it to weather the changes better than some competitors.
The broader market also faced headwinds, with U.S. stock futures edging lower amid concerns over Federal Reserve policy and potential trade tariffs under the Trump administration. However, the spotlight remained on Palantir as investors weighed the implications of the Pentagon’s budget plans and Karp’s stock sale on the company’s future performance.
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