Palantir Is Crashing, and Karp’s “Technological Republic” Reads Like a Desperate Sales Pitch

Palantir has long been seen as a company that thrives on government contracts, but that assumption is being tested. Last Thursday, reports surfaced that the U.S. government is looking to rein in defense spending, and Palantir’s stock has been in freefall ever since.

The stock is down another 8% today, marking four straight days of declines and a 23% drop in just a week. It’s now sitting nearly 30% below its all-time high, which it hit earlier this month (that’s what happens when you ride government spending to the moon, only to find out there’s no budget for a return ticket).

The carnage started last Thursday, when The Washington Post dropped a report that Trump’s new Defense Secretary, Pete Hegseth, is looking to cut the Pentagon budget by 8% per year for the next five years. That’s billions of dollars vanishing overnight… unless you’re in the business of buying missiles or patrolling the border, in which case, congrats, your funding is safe. Palantir, however, got the short end of the stick.

Wedbush analyst Dan Ives tried to reassure investors, arguing that Palantir’s “unique software approach” will actually allow it to win more government dollars, not less. But the market doesn’t seem to be buying that argument… at least not right now.

Palantir has been on an incredible run over the past year, rising 340% in 2024 as AI and defense spending drove massive gains. The pandemonium was driven by AI mania, government spending, and Alex Karp’s ability to make investors believe that his company was the only name that mattered in defense software. Turns out, they might have overpaid.

If there was ever a time for CEO Alex Karp to rally the troops, it’s now. And lucky for him, he just so happens to have a brand-new book out, The Technological Republic. Unfortunately, this masterpiece (which is really just a 300-page infomercial for why the U.S. should cut Palantir even bigger checks) isn’t exactly setting the literary world on fire.

Critics have called it a “dismal” read, packed with fear-mongering, over-the-top rhetoric, and (shockingly) an outright sales pitch to buy more Palantir stock. Seriously, the whole thing feels like it should come with a discount code for PLTR shares at checkout.

But even Karp’s cult-like following of retail investors aren’t buying it. The stock keeps sliding, and the reality is setting in… when a company is priced for unstoppable growth, but its biggest customer is suddenly looking to cut spending, that’s a problem.

Even with the sharp drop, Palantir is still up 23% this year, outpacing the broader market. Some investors (and Palantir cult members) believe this is just a temporary pullback, arguing that the company’s government relationships and AI capabilities will continue to drive long-term growth.

But at the moment, concerns over budget cuts and valuation are dominating the conversation. With Palantir still trading at 600x earnings, investors are realizing that maybe, just maybe, a stock trading at 600x earnings wasn’t the best value buy.

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Stock.News does not have positions in companies mentioned.