Palantir Stock Drops Sharply Following Pentagon Budget Cuts and CEO's Share Sale Plan

The defense contractor's shares fell over 10% as investors reacted to proposed U.S. military budget reductions and Alex Karp's planned stock sales.

Palantir's stock declined more than 10% on Wednesday, with further losses in premarket trading Thursday, after news of an 8% annual reduction in the Pentagon's budget over the next five years.
CEO Alex Karp filed a 10b5-1 plan allowing him to sell nearly 10 million shares, raising concerns about insider sentiment following his $1.95 billion share sales in 2024.
The U.S. Department of Defense accounts for a significant portion of Palantir's revenue, with over half of its Q3 2024 revenue coming from global government contracts.
Wedbush analyst Dan Ives argued that the budget cuts could benefit Palantir, as government efficiency initiatives might increase demand for its AI-driven solutions.
The stock's recent volatility follows a strong 2024 performance, with shares quadrupling in value last year and rising nearly 50% year-to-date before this week's sell-off.