Palantir Plunges 5% After Hours: Karp's $1.23 Billion Stock Sale and Defense Cuts Spark Concern

Palantir Technologies (PLTR) shares took a nosedive of 5% in after-hours trading on Wednesday, February 20, 2025, following the announcement that CEO Alex Karp plans to sell up to $1.23 billion worth of the company's stock. This news, coupled with reports of potential defense budget cuts, has raised concerns among investors about the company's future prospects.

Karp's planned stock sale, which is set to take place through September 12, 2025, would net him proceeds of $1.23 billion, based on the current trading price of $123 per share. This sale comes on the heels of Karp's previous stock sales in 2024, which were partly due to required tax-withholding obligations related to the vesting of some restricted stock units.

The planned stock sale has sparked concern among investors, as it could indicate a lack of confidence in the company's long-term prospects. However, it is essential to note that Karp's previous stock sales were not solely driven by a desire to cash out but were also influenced by tax obligations.

Adding to the investor unease is the report that the Pentagon has been ordered to prepare for 8% annual defense budget cuts over the next five years. This potential reduction in defense spending could have significant implications for Palantir, as the company derives a substantial portion of its revenue from government contracts. The prospect of sustained reductions in defense spending raises concerns about the company's future revenue from government contracts.

Palantir's stock price has been on a blistering rally, with a 63% gain so far in 2025 and a 427% increase over the past 12 months. However, the recent news has led to a significant pullback in the stock's price, with shares falling as much as 12.5% during the day before recovering slightly in after-hours trading.

Jim Cramer, host of Mad Money and a former hedge fund manager, has weighed in on the situation, urging "Palanteers" to remain supportive of the company amid the defense cuts. Cramer's endorsement has sparked mixed reactions, with some investors seeing it as a vote of confidence, while others remain skeptical.




In conclusion, Palantir's planned stock sale by CEO Alex Karp and the potential defense budget cuts have raised concerns among investors, leading to a significant decline in the company's stock price. While Karp's previous stock sales were partly driven by tax obligations, the planned sale could still indicate a lack of confidence in the company's long-term prospects. The potential defense budget cuts could also impact Palantir's future revenue and growth prospects, given the company's significant government contracts. Investors will need to closely monitor Palantir's performance and the broader market conditions to make informed decisions about the company's future.