TLDR
- Palantir stock fell 9.35% on Tuesday, marking its fifth consecutive losing session and longest streak since March
- The decline comes despite strong Q2 earnings that saw revenue top $1 billion for the first time
- Short seller Citron Research issued a bearish report with a $40 price target, calling current valuations excessive
- Broader tech sector weakness affected major AI names including Nvidia and Meta
- Stock has pulled back 16% from its 52-week high set just last week
Palantir Technologies stock took another beating on Tuesday, dropping 9.35% to $157.75 as investors continued their rotation away from high-flying tech names. The decline marked the company’s fifth straight losing session, its longest streak since March.
The sell-off comes just weeks after Palantir delivered strong second-quarter results. The company topped $1 billion in quarterly revenue for the first time in its history. Since its April low, the stock had surged more than 150% through the earnings report.
Technical Breakdown Signals More Pain Ahead
From a technical standpoint, Palantir is showing clear signs of weakness. The stock filled a gap from August 4th, the day before its post-earnings surge that sent shares up 8%. Since that peak, the stock has retreated sharply and now trades 16% below its 52-week high.
Technical analysts point to the 50-day simple moving average as the next key level to watch. This average currently sits just above the round $150 level. A test of this support appears likely given the current selling pressure.
The breakdown becomes more concerning when viewed in the context of the broader software sector. The iShares Expanded Tech-Software Sector ETF, where Palantir is the largest holding, fell 1.6% on Tuesday. The fund broke below its 50-day moving average for the first time since February 21st.
Short Seller Adds Pressure
The selling pressure intensified after Citron Research published a bearish report on Monday. The short seller set a price target of just $40 for Palantir shares. Citron founder Andrew Left called this target “generous” when compared to current levels.
Citron derived its price target by comparing Palantir to OpenAI’s recent $500 billion valuation. The comparison highlighted what the firm sees as excessive valuations in the AI space. The report came as OpenAI prepares to sell several billion dollars worth of stock.
Palantir wasn’t alone in Tuesday’s tech rout. The Technology Select Sector SPDR Fund dropped 1.7% during the session. AI leader Nvidia fell 3.5% while Advanced Micro Devices declined more than 5%. Meta Platforms, which has invested heavily in AI infrastructure, dropped over 2%.
The broader tech sector has lost more than 2.4% over the past five trading sessions. This marks a shift from the concentrated gains that powered markets to record highs earlier this year.
Market leadership has rotated toward more defensive sectors. Real Estate, Utilities, Materials, and Consumer Staples led Tuesday’s gainers. Healthcare and homebuilding stocks have outperformed over the past week, rising more than 4% and 3% respectively.
The tech-heavy Nasdaq Composite fell nearly 1.5% by the close. The S&P 500 ended down more than 0.5% as Big Tech’s outsized weighting dragged on the broader index.
Some strategists view this rotation as healthy for long-term market stability. Citi’s Scott Chronert described the current environment as “two parallel paths” for the S&P 500. One path remains led by AI-fueled growth companies, while the other gains support from traditional economic sectors.
The next technical target for Palantir appears to be around $140 if selling pressure continues. This level would represent a deeper retest of the breakout that began in April when shares cleared $98.27. The stock’s pre-market trading on Wednesday showed continued weakness with shares down an additional 3.96% to $151.51.
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