Michael Burry Is Betting Against Palantir Again—Should Investors Care?

Michael Burry is doubling down on his bearish position in Palantir Technologies NASDAQ: PLTR. In his Substack newsletter, Cassandra Unchained, Burry announced his purchase of out-of-the-money put options on PLTR stock expiring in March 2027. The contracts reportedly have a strike price in the low- to mid-$100 range.

On the one hand, it’s easy to see why Burry would short PLTR. The stock is up about 30% in the last 30 days. Most of that gain came after the company’s Q2 earnings report, which was stellar by nearly every measure. Revenue grew 93% year-over-year to $1.94 billion, U.S. commercial revenue jumped 149% to $764 million, and the company closed 220 deals worth at least $1 million. Adjusted free cash flow came in at $1.22 billion, a 63% margin, with $9.2 billion in cash and no debt on the balance sheet.

Essentially, Burry is rebuilding his earlier bearish bet, one that he partially covered when PLTR hit $107 in June. In this case, Burry is taking advantage of cheaper premiums to take a second bite at the apple.

Burry doesn’t offer a new rationale, so it’s a continuation of two major themes: Valuation – Burry has likened Palantir’s current valuation to a “sandcastle.” He estimates that PLTR is trading 16x above its intrinsic value and has said the stock will be worth under $1 in the long run. Hyperbole aside, by conventional metrics, Palantir is expensive.

Accounting Concerns – Ever since Palantir went public via a direct listing in 2020, many investors have been concerned about the company’s heavy reliance on stock-based compensation. Burry believes that the company is underreporting the level of that compensation, which he puts at approximately $5 billion in the past year.

The valuation question is not new and will continue to be an issue for some investors until it’s not. Analysts have been raising their price targets for PLTR, which now has a consensus price target of $192.19.

Stock-based compensation is a trickier issue. Burry's argument hinges on real accounting mechanics. Using generally accepted accounting principles (GAAP), stock-based compensation is expensed at its grant-date fair value, then spread over the vesting period. This is regardless of what the stock is worth by the time those shares actually land in an employee's account. If Palantir granted restricted stock units (RSUs) when shares traded in the $30s or $40s, the income statement only ever reflects that original, pre-rally value. The market value of the shares, once they vest and are issued, can be much higher. That gap is real, and it's the ...