Palantir Technologies stock price fell 12.9% due to Alex Karp’s trading strategy and the Pentagon’s budget cut.
The Palantir Technologies’ stock price (PLTR) collapsed on Wednesday, falling 12.9% in hours. Interestingly, Palantir’s stock price started at $123.86 and dropped to $108.56 before rising sharply to $112.06. But this decline was expected; a sequence of events led to this result.
Why Did Palantir Technologies Stock Price Crash?
A Washington Post is one of the leading causes of Palantir’s stock price decline. According to the report, Defense Secretary Pete Hegseth has issued new guidelines for cutting the Pentagon’s budget by 8% annually over the next five years.
Military contractors like Palantir, which makes a substantial amount of money from contracts with the US government, will be significantly impacted by this cut. Palantir’s 2024 annual report shows that 17% of its total revenue comes from its top three government clients.
More importantly, the Department of Defense oversees these clients, so this budget cut would significantly impact their revenue. Investors were, therefore, alarmed by the cut, which led to selling pressure and a 13% decline in the price of PLTR stock.
That’s not all, though. Alex Karp, the CEO of Palantir Technologies, also shared information that impacted the stock price. Investor confidence has been shaken by Karp’s recent adoption of a new stock trading strategy that permits him to sell 10 million shares over the next eight months.
The market’s response was overstated when the new plan for the budget cut was revealed, even though the previous plan had even higher sales.
What Comes Next: Is This a Time to Buy?
The downtrend has frequently been viewed as a buying opportunity by financial market experts. This isn’t always the case, though. The Palantir presents a significant opportunity for investors due to its historical price performance and demand.
After taking into account its expansion in the commercial AI industry, analysts’ perspectives remain consistent. Nevertheless, given the volatility of the PLTR stock price, investors should keep an eye on the performance of the stock price in terms of government spending and changes.
