If you’ve been anywhere near the r/PLTR or r/Palantir subreddits over the past few years, you’d think Alex Karp was the second coming of Steve Jobs… if Steve Jobs had a Ph.D. in neoclassical social theory, a penchant for tai chi, and looked like he just got electrocuted every morning. But for all the love retail investors have showered on Palantir (+130,000 strong between those two subreddits), the romance might finally be over.

Retail investors made Palantir what it is today… propping up the stock while Wall Street analysts turned up their noses. And Karp loved them for it, often throwing verbal haymakers at institutional investors like he was in a UFC press conference. He’s called short sellers "cocaine addicts" and dropped f-bombs on earnings calls multiple times. In the past, Wall Street analysts hated him almost as much as they hated his stock, with only 5 out of 20 analysts giving PLTR a "buy" rating just a few months ago. Compare that to Nvidia, where not a single analyst dares whisper the word "sell."

But unfortunately, the retail crowd is headed for the exits.

Palantir stock has cratered 36% from its peak of $125.41 on February 18… a freefall that would make even Cathie Wood wince. And now, the very retail traders who rode PLTR to the stratosphere are now dumping the stock like a trash truck at the landfill.

According to Vanda Research, retail purchases of Palantir have fallen off a cliff since early February. It’s almost as if retail traders finally read the fine print and realized that Palantir insiders (including Karp himself) have been aggressively cashing out. Karp recently set up a 10b5-1 trading plan to offload up to 9.975 million shares by September 2025. (Go checkout the Palantir Reddit page right now, there’s a lot of folks freaking out).

And it’s not just Karp. Other Palantir insiders have also been busy selling their shares, adding proof to the theory that the stock’s meteoric 248% run-up in 2023 may have been a tad… excessive. Investors love a growth story, but they don’t love feeling like bagholders when the people running the company are the ones cashing in.

For years, Palantir’s stock was the financial equivalent of a punk rock band that didn’t care about mainstream success. Wall Street analysts could scoff, downgrade, and write snarky reports, but Palantir didn’t need their approval… it had an army of retail investors who believed in the mission (and would buy their t-shirts if they sold them).

But the winds are shifting. Defense spending cuts could take a huge bite out of Palantir’s government contracts, which have long been its bread and butter. New U.S. Defense Secretary Pete Hegseth has reportedly ordered an 8% annual cut in defense spending over the next five years.

On top of that, Palantir’s commercial growth (once thought of as the chosen one) isn’t accelerating as fast as some had hoped. Even with the excitement around its Artificial Intelligence Platform (AIP), the company’s reliance on just three customers for 17% of revenue is raising some questions. On the other hand, employee headcount grew by just 5% in 2024 after declining 3% in 2023, making it one of the few AI companies that isn't aggressively expanding.

It’s easy to dunk on Palantir when the stock is getting pummeled, but let’s be real… this isn’t the first time PLTR has gone through a hype cycle. The company has a way of bouncing back when people start counting it out.

The question is whether retail investors still have the patience to sit through another round of volatility. Right now, retail investors are losing hope, and without a major catalyst, it’s looking like it could even go lower. If PLTR wants to regain its retail faithful, Karp might need to do more than just drop f-bombs at hedge funds… he might need to actually show that Palantir can sustain its valuation without the Reddit army keeping it afloat.

PS: If you want stock picks and trade ideas every single day (in addition to breaking news)… you should definitely check out our premium membership. Our team of real investors digs through SEC filings and insider trades daily, flagging opportunities that stand out. When we spot a can’t-miss trade, we break it down in a full write-up… on top of all the other perks you get as a premium member. Check it out here. 

Stock.News does not have positions in companies mentioned.