Palantir Drops 25% Despite 70% Revenue Growth as Investors Flee Sky High Valuation

Shares of Palantir (NASDAQ:PLTR | PLTR Price Prediction) fell to just below $133 today, coinciding with a sharp shift in retail sentiment. The stock is down 25% over the past month despite reporting 70% total revenue growth and a 137% increase in U.S. commercial revenues in Q4 2025. Reddit sentiment deteriorated from bullish in the quarter to bearish this week, with mentions spiking around three key posts: “The Palantir Paradox: I ran a Reverse DCF, and the math is terrifying” (294 upvotes), “Wow! Almost 15% Dip” (593 upvotes), and “Shifting Political Winds Could Endanger Palantir’s Revenue” (193 upvotes).

Why Investors Are Turning Skeptical Despite Record Growth

The disconnect between Palantir’s operational performance and stock price reflects mounting valuation and sustainability concerns. Reddit discussions reveal three core anxieties:

• Extreme valuation multiples: The stock trades at a P/E ratio exceeding 200 with a price-to-sales ratio of 68.77, leaving zero room for growth deceleration.
• Political and budget risk: Investors worry that shifting government spending priorities could threaten Palantir’s 66% growth in U.S. government revenues, which rely heavily on Department of Defense contracts.
• Insider selling wave: Multiple executives sold shares throughout the decline, with no insider purchases to signal confidence at lower prices.

UBS reduced its price target from $205 to $180 while maintaining a Neutral rating, acknowledging “astounding” performance but expressing caution on valuation. Meanwhile, Michael Burry warned PLTR could fall 58% based on technical patterns, though Norway’s $2 trillion sovereign wealth fund contradicted this view by establishing a $5.15 billion stake.

The Palantir ($PLTR) Paradox: I ran a Reverse DCF, and the math is terrifying
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Wow! Almost 15% Dip
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Shifting Political Winds Could Endanger Palantir’s Revenue
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Valuation Analysis After the Sell-Off

The technical chart shows Palantir with an RSI of 31.35, below the 30 threshold typically considered oversold. Even so, these same analysts maintain a consensus price target of $176.38, implying 32.46% upside. However, the wide range of forecasts from $50 to $260 reflects deep disagreement about fair value. Snowflake (NYSE:SNOW), a peer in data analytics, trades at more modest multiples despite similar AI positioning, highlighting Palantir’s premium valuation.

The debate centers on whether Palantir’s “Rule of 40 score of 127” and CEO Alex Karp’s claim that the company is “an n of one” justify the premium valuation, or if Reddit skeptics are correct that the math doesn’t support current prices.