Michael Burry believes Palantir's stock should be worth $1. Wall Street disagrees.

Renowned short seller Michael Burry, whose successful strategy in the run-up to the 2008 crisis formed the basis for the book and movie *The Big Short*, is once again betting against Palantir. On his blog, Cassandra Unchained, he wrote that he considers the company to be extremely overvalued: in his opinion, the company’s fair value is 99% less than its market value. Wall Street disagrees with Burry’s assessment: most analysts recommend that investors buy Palantir shares, and the average price target suggests they will continue to rise.

Following Palantir’s latest earnings report, Burry took another look at the company’s financials. He noted that over the past 12 months, Palantir’s GAAP net income totaled approximately $3 billion. During the same period, the company granted 31.3 million shares to employees, valued at approximately $5 billion. According to Burry’s calculations, the value of these shares was roughly six times the stock-based compensation expense that Palantir reported in its financial statements for the same period.

According to Burry, none of the 66 companies he analyzed following their most recent earnings reports showed such a discrepancy between the value of shares granted to employees and the stock-based compensation expense reported in their financial statements. He attributes a significant portion of this discrepancy to the sharp rise in Palantir’s stock price: during the rally, the company’s market value reached 50–100 times its annual revenue.

In addition, Burry pointed to an increase in Palantir’s off-balance-sheet irrevocable commitments to purchase infrastructure—that is, commitments that the company can no longer back out of. According to him, their total value has more than tripled this year.

Burry reported that he had increased his short position in Palantir by resuming purchases of Palantir put options expiring in March 2027 with strike prices ranging from approximately $100 to $150. Burry explained that the timing of the purchase was driven by the fact that Palantir put options had fallen sharply in price: the market had begun to price in less volatility for the company’s stock. At the same time, the investor notes, Palantir’s market capitalization has once again reached approximately 69 times its annual revenue.

Wall Street does not share Burry’s pessimism regarding Palantir. According to MarketWatch, 20 out of 35 analysts recommend buying the company’s stock, while three others have assigned it an equivalent “Overweight” rating. Ten advise holding the stock, and only two recommend selling. The consensus recommendation remains “Overweight.” The average price target is $197.71, which is 13% above the current market price. Palantir shares closed at $175.2 in the latest trading session.

Following Palantir’s second-quarter earnings report, most analysts maintained their previous recommendations on the company’s stock, while some raised their price targets. The company increased its revenue by 93% year-over-year, and revenue from its U.S. commercial business by 149%. Analysts attributed this growth primarily to demand for Palantir’s AI products. Mizuho raised its price target from $185 to $215, UBS from $200 to $220, and Citi raised its target price from $200 to $245. Bank of America maintained its “buy” rating and $255 target price.

This article was AI-translated and verified by a human editor