Palantir Technologies (NASDAQ: PLTR) stock cratered this week, dropping as much as 10% on Wednesday to $112.06 per share and shedding even more value—over 10%—in regular trading Thursday. The steep decline follows two key developments: CEO Alex Karp’s new stock trading plan and news of looming Pentagon budget cuts.
In a regulatory filing late Tuesday, Palantir revealed Karp intends to sell nearly 10 million shares over the next six months. The move raised eyebrows among investors, especially as it coincides with news that could hit the company’s core business. On Wednesday, The Washington Post reported Defense Secretary Pete Hegseth has ordered top Pentagon officials to draft plans for an 8% annual cut to the defense budget—currently about $850 billion—over the next five years. Hegseth gave military leaders until Monday to submit proposals.
Palantir (NASDAQ: PLTR) stock had been a standout performer, soaring nearly 50% this year alone after two years of strong gains. But the double whammy of insider selling and potential hits to its defense contracts sparked a sell-off. The stock now trades at a lofty price-to-earnings (P/E) ratio of nearly 600-to-1, a metric showing investors are paying $600 for every dollar of earnings—a sign of sky-high expectations.
The defense budget cut comes as part of the Trump administration’s broader push to reduce government spending and downsize the federal workforce since President Donald Trump began his second nonconsecutive term on January 20.
As part of this initiative, Trump appointed Tesla (NASDAQ: TSLA) CEO Elon Musk to head the newly established “Department of Government Efficiency” (DOGE). Both Trump and Musk have faced backlash over their approach, with some of their measures being successfully challenged in federal court.
