Palantir Technologies Inc. shares rallied 28% on Tuesday, erasing the entirety of year-to-date paper profits for short sellers, inflicting billions of dollars in mark-to-market losses on investors positioning against the defense software specialist.
Short sellers accumulated roughly $3 billion in paper losses in a single session as Palantir's stock jumped 30%, marking its strongest single-day performance in two years, according to financial data from partner S3 Partners.
Prior to Monday's market close, market participants betting against the enterprise data analytics provider were holding paper profits of approximately $2.7 billion for the year, driven by prolonged weakness in the equity, according to the data cited by Bloomberg.
Upgraded Guidance Triggers Rally
The abrupt reversal in market fortunes follows Palantir’s Monday announcement, in which it raised its full-year guidance for both revenue and operating income. The elevated financial projections provided fresh impetus to buyers, overwhelming bearish sentiment that had mounted over previous months.
Concerns over broader enterprise spending and bloated valuations were countered by comments from Palantir Chief Executive Officer Alex Karp, who highlighted "otherworldly" commercial appetite for the firm's data analytics and artificial intelligence suite.
The remarks helped quiet investor worries regarding potential competitive threats from AI model developers such as Anthropic PBC, which some feared might cannibalize legacy enterprise software architecture.
Wall Street Split On Valuation
Despite Tuesday's historic intraday surge, Palantir shares remain down more than 8% year to date, putting the equity on track for its softest annual performance since 2022. A portion of the downward pressure earlier in the year was catalyzed by high-profile short positions, including bets disclosed in November by prominent investor Michael Burry. Burry later noted in a June newsletter that he had covered half of his short position in Palantir.
Wall Street analysts remain visibly divided over the stock’s prospective trajectory, primarily due to its premium valuation. Palantir trades at more than 83 times forward earnings, representing a substantial markup over the broader software and technology sector. In contrast, Microsoft (MSFT), Amazon (AMZN) and Oracle (ORCL), who also compete in the US enterprise space, have significantly lower valuations.
PLTR Stock: Retail View
Retail sentiment on Stocktwits around Palantir was in the ‘extremely bullish’ territory, with message volumes at ‘extremely high’ levels.
is down 13% year-to-date. The S&P 500 ETF (SPY) is up 23% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 29%.