Palantir Plunges 9.35% on Record $22.25B Volume Ranks Third in Market Activity

Palantir (PLTR) closed 9.35% lower on August 19, 2025, with a trading volume of $22.25 billion, a 104.5% increase from the previous day, ranking third in market activity. The decline marked its fifth consecutive session of losses following a record-breaking earnings report earlier in the month that propelled the stock to all-time highs.

The selloff intensified valuation concerns as Palantir’s forward price-to-earnings ratio surpassed 245x, far exceeding peers like Microsoft (29x) and Apple (30x). High-profile short seller Andrew Left of Citron Research argued the stock was "detached from fundamentals," projecting a potential $40 price level if valued similarly to OpenAI. Despite strong revenue growth and government contract wins under President Trump’s administration, analysts noted the stock’s rapid 100%+ year-to-date gain had outpaced realistic growth scenarios, with eight Wall Street analysts assigning only two "buy" ratings and six "hold" ratings.

Palantir’s recent performance has drawn comparisons to speculative tech darlings, as its market capitalization surged into the top 10 U.S. tech companies. However, the stock’s volatility and elevated multiples have sparked debates over sustainability, particularly as broader market conditions weakened on Tuesday. Jefferies and HSBC analysts separately highlighted risks of overvaluation, warning the stock might already be "priced for perfection."

A backtested strategy of buying the S&P 500’s top 500 stocks by daily trading volume from 2022 to 2025 generated a 7.61% total return with a Sharpe ratio of 0.94. However, the approach faced a maximum drawdown of -29.16%, underscoring its sensitivity to market downturns.