Palantir Stock Plunges 10% Amidst Pentagon Budget Cut Concerns
NEW YORK, Feb. 24, 2023 - Palantir Technologies Inc. (PLTR) plummeted 10% for a second consecutive day on Thursday, extending its decline from a Washington Post report indicating significant Pentagon budget reductions over the next five years.
The Post's report revealed that Defense Secretary Pete Hegseth issued a memo to Pentagon officials outlining plans to cut 8% from the defense budget annually for the next five years, potentially amounting to tens of billions of dollars in reductions. The report highlighted that 17 categories would be exempted from the cuts, including border operations and munitions acquisitions.
Palantir, a provider of AI software for surveillance used by the U.S. government, has seen over half of its recent quarterly revenue stem from government contracts, primarily driven by the U.S. Department of Defense.
Despite the selloff, Wedbush analyst Dan Ives, a Palantir advocate, defended the company's ability to mitigate potential budget cuts. In a note to investors, Ives emphasized that Palantir's "unique software approach" will allow the company to secure additional budget dollars at the Pentagon.
The Financial Times reported in December that Palantir is exploring collaborations with competitors, such as Anduril, to form a consortium bidding for U.S. government contracts.
Palantir's stock has soared in 2023, with gains exceeding 48% through Wednesday, ranking as the second-best performer in the S&P 500. Over the past 12 months, the stock has seen an impressive surge of over 300%.