"The Axios Show": Palantir is "baller" and Wall St. analysts don't get it, Karp says
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Wall Street analysts are stuck in outdated, favoritism-driven ways of thinking and can't understand the success of companies like Palantir, co-founder and CEO Alex Karp told Axios' Mike Allen on "The Axios Show."
The big picture: The tech company's stock slid about 5% over the last week after a ferocious run in recent years — with a 267% rise in the past 12 months alone.
Driving the news: When asked why Palantir's stock fell this week after Monday's earnings report — which beat analyst estimates for the 21st consecutive quarter — Karp turned the focus to the stock's longer-term rally.
- "The market has historically understood" Palantir in a way that many analysts don't, he said.
- In other words, he agrees with the investors — those actually buying the stock — instead of analysts getting paid to tell others whether to buy it or not.
Zoom out: Shareholders of Palantir, which sells AI-driven software to help governments and companies analyze complex datasets, have been richly rewarded by the tech boom and the Trump administration's passion for AI.
- That has sparked a fresh debate about tech valuations, and whether future earnings potential justifies sky-high stock prices.
By the numbers: With their huge gains over the past year, Palantir shares trade at more than 200 times the company's expected earnings over the next year.
- That is an astronomical sum by Wall Street standards — orders of magnitude higher than even tech high-flyers like Nvidia.
The intrigue: Michael Burry, the investor made famous by "The Big Short," recently took a position betting that Palantir stock will fall from its lofty heights.
- In response, Karp called Burry "batsh*t crazy" during a recent TV interview.
What they're saying: Over the long term, it's the stock buyers who have the right view on Palantir and not the Wall Street types modeling how the company should perform, Karp told Axios.
- "The market price has been more accurate than the analyst price ... It's like, what does the market understand that the analysts can't understand?" Karp said, adding that analysts are stuck in antiquated ways of thinking about corporate performance.
- "That frame does not allow you to disambiguate between weak, medium weak, strong, and baller product; weak, medium, strong baller culture," he said.
Is Palantir "baller"?
- "That's what the market seems to be saying. I don't know, I'm just modest over here," Karp said.
Zoom in: Karp argued that analysts' valuation models depend on factors they control, which he says were tied to who they like and don't like.
- "Well, of course they don't like me," Karp said.
- "I'm not the person that should be having this much fun," he added, saying it "annoys" old-guard media, academics and finance types.
