Palantir's Stock Plummets 17% in Six Days, Short Sellers Profit 16 Billion

Palantir Technologies Inc. (PLTR.US) has experienced a tumultuous week, marked by a six-day consecutive decline in its stock price. This downturn has resulted in a significant erosion of the company's market capitalization, which has evaporated by over 73 billion dollars. This sudden drop has provided a rare opportunity for short sellers, who have managed to secure profits exceeding 16 billion dollars. However, this gain only marginally offsets the 45 billion dollars in losses that short sellers have incurred throughout the year.

The decline in Palantir's stock price, which began on August 12th, has seen the company's shares fall by more than 17%. This marks the longest consecutive decline since April 2024 and is on track to be the worst weekly performance since the "tariff storm" in early April. Despite this setback, Palantir remains one of the top performers in the S&P 500 index for 2025, with a year-to-date increase of 106%.

The dramatic rise in Palantir's valuation has led many short sellers to abandon their positions, as the stock's upward trajectory seemed unstoppable. The proportion of shorted shares relative to the total float has decreased from nearly 5% a year ago to approximately 2.5% currently. This shift indicates that short sellers have been forced to cover their positions as the stock price continued to rise.

This recent downturn is part of a broader trend affecting technology giants, as investors seek to take profits and shift towards sectors with lower valuations. This has led to a sell-off in high-beta stocks, which are particularly sensitive to market movements. The decline in Palantir's stock price is not solely attributable to short selling but is rather a result of broader market dynamics.

Despite the recent sell-off, there are indications that short sellers are beginning to re-enter the market. Data shows that short positions have increased by approximately 10 million shares since early June, out of the company's total float of around 230 million shares. This suggests that short sellers are positioning themselves to capitalize on any further declines in Palantir's stock price.

Professionals on Wall Street anticipate that even if the stock price rebounds quickly, short sellers may continue to build their positions in anticipation of further declines. The recent downturn has highlighted the volatility and uncertainty surrounding Palantir's stock, as investors grapple with the company's high valuation and the broader market trends affecting the technology sector.