Palantir Technologies shares have dropped over 17% since hitting a record high on August 12, wiping out US$73 billion in market value.

The slump marks its longest losing streak since April 2024 and sets the company up for its worst week since early April, making it the biggest loser in the S&P 500 Index over the past six sessions.

Short sellers gained more than US$1.6 billion from the drop, according to S3 Partners. Still, overall short bets on Palantir remain down US$4.5 billion for the year.

Short interest has fallen to about 2.5% from nearly 5% a year ago, though it has started rising again since June as the stock weakened.

Despite the recent slide, Palantir remains the S&P 500’s top performer in 2025, with shares still up 106% year-to-date.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Extreme valuations create momentum that defies traditional investing logic

Palantir’s recent $73 billion market value loss highlights how momentum can sustain seemingly impossible valuations for extended periods1.

Despite trading at a trailing price-to-earnings ratio of 526 and a forward P/E of 250, valuations that would typically signal overpricing, the stock remains up 106% for 202512.

The company’s market capitalization of $374 billion compared to its $3.44 billion in revenue creates a revenue multiple of roughly 109 times. Institutional and retail investors continued buying throughout the year2.

This demonstrates how AI and data analytics narratives can override traditional valuation metrics when combined with strong momentum, creating cycles where rising prices attract more buyers regardless of fundamentals.

The pattern shows how modern markets can sustain what previous generations of investors would consider impossible valuations when growth expectations and technological narratives align.

2️⃣ Short sellers surrender in face of relentless momentum despite obvious overvaluation

Short interest in Palantir dropped from nearly 5% to about 2.5% of the float over the past year, showing how even contrarian traders abandoned their positions despite extreme valuations1.

This capitulation occurred as short sellers accumulated $4.5 billion in paper losses for 2025, with many being “run over by a monster momentum trade” or “forced out after the freight train hit,” according to Interactive Brokers’ chief strategist1.

Recent Palantir developments