The battle of the titans: why does famed shortstop Andrew Left bet against Palantir?

Renowned short-seller Andrew Left, founder of investment firm Citron Research, has criticized the rapid growth of shares of Palantir, which supplies AI for military and civilian needs. The company's securities are up nearly 140% since the beginning of the year and have been the S&P 500's top gainer, but Left thinks its current multiples are "absurd." In his opinion, the fair value of the company is almost three times lower than the real value. He admits that he could be wrong and the stock could grow further, but he keeps a short position on Palantir in case of a market correction.

Andrew Left, a prominent trader who bets on stocks going down, called the current price of Palantir securities, popular among investors keen on AI and mostly retail, overvalued, MarketWatch reports. The publication called Left's comments on Palantir "a battle of two titans."

Since the beginning of the year, the company's shares have risen by almost 140%, showing the best result among S&P 500 participants, the publication notes. Along with this, the valuations of its securities have also risen: thus, the multiplier, which reflects the ratio of the value to the forecast profit for the next 12 months, is now 242, and to annual revenue - 137, writes MarketWatch with reference to data from FactSet.

"I stopped looking at the multiples because they're just absurd," Left said in an interview with Fox Business on Wednesday, August 13. - There's never been a company with a price-to-earnings multiple [Palantir's 290] that hasn't adjusted by 50 percent."

According to the shortstop, Palantir is not an "easy money" story, but a narrative with inflated multipliers and inflated expectations. "The last thing I am is a hitter," Left continued. - I like [company CEO] Alex Karp (...). He's a leader to be feared (...) It's a great company, but even if it was the greatest company ever made and we gave it the same multiples that Nvidia had in 2023, the stock would still be two-thirds cheaper."

Left believes that a more reasonable valuation for Palantir securities is $65-$70, i.e. almost three times lower than the current one. He acknowledged, however, that he could be wrong and that the stock could continue to rise. "I don't expect to catch an all-time high at all. I have a balanced portfolio. I have long positions in a lot of Nasdaq securities. I'm long Amazon and Apple. I think they're great companies. And I just keep Palantir in "short" in case the market corrects," Left summarized.

Wall Street's most popular recommendation is to keep previously purchased shares of Palantir in the portfolio (17 Hold ratings out of 29). Only eight analysts recommend buying these securities (Buy and Overweight ratings), while the remaining four suggest selling (Underweight and Sell).

Following Palantir's strong quarterly report in early August, several analysts immediately raised their price targets on the company's stock. However, the Wall Street consensus target price is still below the current price target. The average target is $153.4, which implies a nearly 17% drop in the company's market value from the last close on August 13.

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