Burry Bearish on Palantir: Valuation Could Fall Below $100 Billion
nashnova research
"Big Short" investor Michael Burry publicly called Palantir overvalued, warning its market cap could drop from roughly $432.3 billion to below $100 billion — a potential decline exceeding 75% — arguing the company is not the software business it claims to be.
What is Burry's core call?
Burry posted on X that Palantir "is back in the stratosphere, but the facts haven't changed." The post has since been removed.
He labeled Palantir "a consulting firm riding the wave of AI FOMO demand", not the high-growth software company the market prices in.
This means → even if enterprise AI spending runs hot for several more years, the eventual drop will be just as brutal — or worse.
Why does he say Palantir is not a software company?
Burry's key metric is deferred revenue — money customers pay upfront before services are delivered — as a share of total revenue. Palantir sits at roughly 32%, nearly identical to consulting giant Accenture at about 31%.
By contrast, SaaS peers like Salesforce and ServiceNow range from 80% to 207%.
In plain terms = true software businesses collect subscription fees before delivering the product, so deferred revenue is naturally high. Palantir's number looks like a "bill-per-project" consulting model, undercutting the software narrative at its foundation.
What do the receivables reveal?
Accounts receivable rose from $1.04 billion at end-2025 to $1.49 billion by June 30, 2026 — a jump of more than 40% in six months.
One customer accounts for 27% of total receivables but contributes less than 10% of revenue.
This means → a large chunk of booked revenue is concentrated in a client whose actual spending is modest — raising questions about collection quality. The revenue is on the books, but the cash hasn't arrived.
What is the issue with stock compensation and taxes?
Palantir reported roughly $1.6 billion in pre-tax GAAP profit for 2025 yet paid zero federal cash tax, using net operating loss carryforwards as a shield.
Those NOLs grew from $5.5 billion to $9.0 billion, driven largely by tax deductions tied to stock-based compensation.
In plain terms = the company pays employees in stock instead of cash, diluting shareholders; those stock awards then generate a massive tax shield that wipes out the federal tax bill. Shareholders bear the dilution, the government subsidizes the tax break, and management reaps the benefit.
What do the buyback and the CEO's jet say?
Palantir canceled a $1 billion share-buyback authorization after repurchasing only about $75 million.
Meanwhile, spending on CEO Alex Karp's private jet surged from $7.7 million in the prior year to $17.2 million in 2025.
This reflects a management team that pulled back on returning capital to shareholders while ramping up its own perks — Burry called the jet tab "a $17.2 million mile-high club."
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