The share price of Palantir fell as much as 12.5% Wednesday after news that CEO Alex Karp had adopted a new stock trading plan, and a report that the Pentagon has been ordered to prepare to cut the U.S. defense budget by 8% each year for the next five years.
Palantir is best known for its contracting work providing software and technology services for defense agencies.
On Tuesday night, Palantir in a regulatory filing disclosed that Karp’s new plan will allow him to sell nearly 10 million shares of company stock in the next six months.
The Washington Post on Wednesday reported that Defense Secretary Pete Hegseth has ordered senior Pentagon leaders and other military brass to develop plans to slash the defense budget over the next half-decade. The budget for the current fiscal year is around $850 billion.
The Post reported that Hegseth ordered the proposed cuts to be drawn up by Monday.
Palantir closed trading Wednesday at $112.06 per share, a drop of 10%. Shares were down more than 5% in after-hours trading.
The company, whose market capitalization tops $255 billion, in early February reported $828 million in revenue in the fourth quarter of 2024, with adjusted earnings of 14 cents per share.
Before Wednesday’s abrupt drop, Palantir had been one of the top-performing stocks in the U.S. for the last two years, including a share price rise of nearly 50% in the year to date.
Palantir trades at a price-to-earnings ratio of nearly 600-to-1.
The Trump administration has been engaged in a wide-ranging effort to slash government spending and the number of federal government workers since President Donald Trump was inaugurated for a second nonconsecutive term on Jan. 20.
Trump appointed Tesla CEO Elon Musk to oversee that effort, dubbed the “Department of Government Efficiency.”
Musk and Trump have come under fire for their methods in achieving DOGE’s goal, with some steps being challenged successfully in federal court.
On Tuesday, Karp, who co-founded the company with Peter Thiel, defended Musk during an appearance on CNBC’s “Squawk Box.”
“What the progressive left should be doing is saying, ‘OK, Elon, you’re clearly the most qualified person in the world to do something like this. We want a dialog with you about what you’re doing, how you’re doing,'” Karp said.
“I don’t believe that’s happened,” he added.
