Prof G Markets - Is Palantir Overvalued? Stock Drops 10% on Michael Burry’s Bearish Bet

Episode Date: November 6, 2025

Ed Elson is joined by Gil Luria, Head of Technology Research at D.A. Davidson, to break down how Palantir reacted to news of Michael Burry’s massive bet against the company. Then, Liz Hoffman, business and finance editor at Semafor, joins the show to break down how Wall Street is responding to the NYC mayoral election results.   Sign up for Liz Hoffman’s newsletter Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Welcome to Profitey Markets. I'm Ed Elson. It is November 6th. Let's check in on yesterday's Market Vitals. The major indices climbed on better than expected employment data from the ADP. The US added 42,000 private sector jobs in October and improvement from previous months. Meanwhile, Treasury yields spiked as the Supreme Court signalled skepticism at the the legality of Trump's tariffs. Pinterest had its second worst day ever, falling 21% after earnings showed that tariffs caused retailers to moderate their ad spending, and finally, Snap Shares soared 25% after the social media company announced a $400 million perplexity deal

in its earnings report. Okay, what else is happening? Palantir has fallen more than 10% since Monday night on news that the legendary Mike's, Michael Burry made a huge bet against the stock. His firm Cyan Asset Management disclosed that it bought put options on about 5 million Palantir shares worth almost a billion dollars. News of the trade followed an impressive earnings report in which Palantir beat Wall Street's expectations on every metric. The software giants saw U.S. commercial software sales grow

121%, U.S. government software sales grow 52%, and overall sales grow 63%. So, who is Michael Burry? Why do investors care about what he thinks? Well, he is the guy who correctly identified the subprime mortgage bubble before it popped in 2008. He eventually shorted the market before the financial crisis. He ended up making upwards of $700 million. So he is a big person, a big icon on Wall Street, and now he believes that he has identified yet another bubble this time it is AI. And as we've covered at length in the past couple of months, many of his concerns are echoed by other investors too. And in this case, many seem to be spooked by Palanty's massive valuation. The stock currently trades at almost 300 times earnings, 125 times sales, and it's

seen a run up of over 250 percent in the past year. alone. So, for more on what is happening with Palantir and how the stock is falling, we are speaking with Gil Luria, head of technology research at D.A. Davidson. Gil, good to have you on the show. Thanks for having me. So Palantir is falling. It's down around 10% after this news that Michael Burry of big short fame is shorting the stock. Let's just start with your initial reactions. What do you make of how the stock moved after this news broke? with trading at 100 times revenue is that those are numbers that are hard to justify. You could argue for 120 times revenue, 80 times revenue, all these numbers are detached from

the fundamentals. They're not based on the stream of future cash flows discounted to this period, which is how we value most stocks. And that makes a stock susceptible to just negative news flow of any type, including a very prominent person taking a negative position in a stock. And this is coming right after Palantir reported earnings, which beat on pretty much all estimates, just so that we have the context. Can you just walk us through what we learned in Palantir's earnings? And then, of course, we learned about Michael Berry. So Palantir's earnings were spectacular. They exceeded anybody's expectations. It's not one of those where, you know, the results are good, but some people expected more.

they grew revenue 63%. This is a $4 billion plus business growing 63%, which was an acceleration from 50% the previous quarter. And they did it at a very profitable level of 50% operating margin. So everything was great. They're more than doubling their commercial business. They grew their government business by 50%. You don't think of that as a business that you could grow that fast. and they did, and they continue to win. They're increasing their backlog significantly, which is all to say they're the best software company. They're performing much better than any other software company.

So the results themselves were great. But again, when valuation is that high, there's nothing that can prevent the stock from falling without really changing what the valuation's relationship is with those fundamental results. Which I think begs the question, like, how do you justify this valuation, training it 300 times earnings, more than 100 times sales, highest sales multiple in the S&P. You know, its market cap is like roughly equal to Netflix. It's generating 10 times less revenue. How do you justify the valuation?

Well, I don't try to. Okay. But many individual investors just really say that, you know what, this is a kind of. company I believe in, I think they can continue to grow these rates for many, many years to come, and now I'm going to be proven right. The parallel here is to think about Tesla 10 or 15 years ago. We were in the same situation. You know, us curmudgeonly Wall Street analysts said, you know, there's no way you can tie this valuation to the fundamental performance of the company. And individual investors said, no, we believe in Tesla. We believe in the product. We believe

in Elon Musk, and it's going to work out. And it did for them for a very long time. And those same people are now telling us, I believe in Palantir's mission. This is a great business that's going to grow very fast for a very long period of time, and we're just going to hang up. And those are really the incremental investors to Palantir. There are institutional investors that have made a lot of money there too. But disproportionately, it's individual investors that are driving Palantir's price and it's not that they can't be right. Palantir, again, I mentioned they crossed the four billion dollar mark. There's far bigger software companies. Adobe does 20 billion, salesperson does 40 billion, Oracle does 50 billion, not to mention Microsoft, etc. So Palantir, if they continue to execute this

level and if nobody else figures it out, can actually continue to grow these rates for many, many years. It's just that, again, us stodgy Wall Street analysts are going to have a hard time making hard predictions on things that are going to happen 10, 20 years from now. It reminds me of the famous saying, the market can stay irrational longer than you can stay solvent. To me, that is what's going on here. What I'm hearing from you is it's very hard to justify the valuation. The fundamentals certainly aren't there. So this is all about the narrative. And it sounds like the question for people who are shorting the stock is, do we really think the narrative is going to run out of steam

on your time frame, on your short position? And perhaps, perhaps no. I mean, certainly didn't happen with Tesla. Certainly hasn't been happening over the past couple of years with Palantir. Do you think that's going to be a problem for the shorts? Exactly. Exactly. Because, again, the Palantir's business is doing phenomenally well. They will continue to grow this fast,

at least for the next couple of years. So if you're sure, you're going to have to be very patient. You know, back to Michael Burry. I think a lot of people see the movie Big Short and think it's this great story about these heroes that got it right. We lived through that period. There were a lot of people that were short, the real estate market, one way or another,

and lost everything. The story of Big Short is about the couple of people that were somehow able to hang on long enough and convince everybody to let them hang around long enough, that they made money. A lot more people lost money shorting the real estate bubble in that time frame. Yeah. I think Christian Bail did a pretty good job as well.

I'm sure that contributed to it. And the Margot Robbie scene in the bathtub didn't hurt. Yes, that's true. So Alex Kopp was asked about this Michael Berry short yesterday. He was on CNBC. He had a very animated response. I just want to play it and quickly get your reaction. It just is super triggering.

because these people, they could pick on any company in the world. They have to pick on the one that actually helps people that actually has made money for the average person that is actually supporting our warfighters. Why do they have to go after us? And I'll tell you what, though, it's crazy motivating because I'll tell you why the short sellers are constantly getting screwed by Pallinger.

Because every time they short us, we just are like tripling down on getting the better numbers and part, honestly, to make them poorer. So I hear that that reads to me as defensive and frantic, but perhaps others read it differently. Maybe it's, maybe it makes you more bullish. What do you think? So this is Dr. Karp getting his own bulletin board material.

If you watched Last Dance about Michael Jordan's last championship season, one of the episodes was about the fact that at some point, everybody was afraid to talk to Michael Jordan, but it motivated him so much that he invented sluts. He lived to think and convince himself. that somebody told him that he can't beat them. This is where Dr. Karp is right now. He loves this.

He wants to compete against the shorts, and that's what's keeping him motivated, and it's helping him keep the company motivated to have an adversary and a foe that he can sling his arrows at. He's doing a phenomenal job of it. He's motivating his people, and they continue to perform well, and again, I wouldn't bet against him.

Final question here. Palantir was obviously the loser on this news down around 10%, but still trading in a pretty incredible multiple. Any concerns about how this could spread, this idea that if Michael Burry says, oh, I'm short, then maybe everyone else gets a bit worried and you starts to see that sentiment kind of infect the rest of the market. Is that a concern for you? I think the concerns about the AI trade at large are there. And we almost see the pendulum swing back and forth daily right now, between the excitement about everything we're seeing in AI and concerns that we're blowing a bubble and back and forth. But Palantir is the highest valuation, so it's just more susceptible than any other stock to these types of concerns, which will probably make it

more volatile than any other stock for a foreseeable future. All right. Gil Lurie, head of technology research at DA Davidson. Always appreciate your time. Thanks, Gil. Thank you. after the break how Wall Street reacted to Mamdani's victory if you're enjoying the show give profitey markets a follow by the show

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We're back with Profty Markets. It's official. The capital of capitalism has elected democratic society. socialist Zora and Mamdani as mayor. New York City's business leaders poured more than $25 million into efforts to defeat Mamdani. Now, Wall Street is recalibrating. Investor Bill Ackman, who had warned about Mamdani for months. He congratulated the mayor-elect on X. Jamie Diamond, the CEO of J.P. Morgan, Jane Fraser, Citigroup's CEO and BlackRock's co-founder Ralph Schloss Stein have also offered their support. They cited their commitment to the city. Still, many in the business community remain

wary about his policies and whether he will follow through on some of his most progressive initiatives. So here to unpack how Wall Street is reacting to the election. We are speaking with Liz Hoffman, Business and Finance Editor at Semaphore. Liz, thank you very much for joining us on Profite Markets. Thanks for having, man. So let's get your reactions to the election, and then maybe we'll get into how Wall Street has responded. I'll just start with, what do you make of this election? What does it say about where we're at and where New York City is heading? Yeah, I mean, Zoran Mondani ran a very disciplined campaign around an issue that matters to a lot of New Yorkers,

so not terribly surprising. I think this was largely priced in kind of politically, and as we'll talk about with the financial set, after his primary win in June, there was obviously a contingent trying to, to sort of, you know, pluck victory from the jaws of defeat here and rally first around Mayor Adams, later around Cuomo. There was a lot of jockeying to try to get the Republican in the race to drop out, a sense that, you know, correctly, they would have split the non-Mondani vote. In the end, it didn't matter. And he won quite handily. You know, with the message that really resonates in this particular moment, which is that New York is crazy expensive.

Yeah. You speak with a lot of these leaders, or you're tapped into the scene. How do these business leaders, how do people on Wall Street feel about this election now? I would say it went for, if you go back to June, kind of shock and disbelief, the five stages of grief, right? Shock, disbelief, anger. I would say, you know, by this week, resignation had taken over. And, you know, these are people who live by the numbers. They know how to read polling that was very consistent. And actually, if anything, sort of under, you know, overestimated how well, you know, the other candidates on the ballot. would do. And so, you know, in my conversations over the last couple of weeks, I think you started to get a sense of, okay, New York is resilient. We got a lot going for us as a city. Read what, you know, you can read what you want about sort of the economy, but this is still the financial

capital of the world and is getting stronger, you know, in the global financial system, not weaker. We can survive this. And I think the conversations, you know, that I've had today, there's a little bit of navel gazing. There's a sense, I think, that, I mean, a real realization that they have lost huge amounts of power in their own backyard over a city that they, you know, haughtily though not terribly inaccurately believe that, you know, they have built over, you know, decades and decades. And also over their own employees. I mean, if you look at Mamdani's coalition, it was really centered around college-educated white, upperly mobile professionals. These are the people who work at these big banks and investment houses and just

told their CEOs to buzz off. What would you say are, like, the biggest concerns? Is it taxes? Is it policing? That's something that Andrew Ross Sorkin brought up when he was on our show. Is it just the fact that he is a self-described democratic socialist? Like, what are the top concerns? Yeah, the tax is, I think, actually, less of a concern. You know, billionaires don't like being taxed, but they're pretty good at not being taxed. And I should say a lot of these guys don't live in New York. So the city taxes won't really hit them. They don't mind being taxed so much as they mind being scolded. They mind being talked down to, which, you know, I think Mamdani has real, you know, ideological problems with the capital class.

And he's not been shy about it. So that's one. Two, is quality of life in policing. And that's very real. And I don't think there's just confined to the kind of noblessebleege elite of New York. I mean, that is just last week, the Southern District. in Manhattan brought a big racketeering case against essentially an open-air drug market in Washington Square Park, one of the most beautiful corners of the city. That's a real thing. You can go back a couple of years to violence on the subway. I mean, there was a man killed on the subway a couple of years ago who worked at Goldman Sachs. And that got the CEO of Goldman Sachs on the phone with the mayor that said, these are real problems. These are people who have a lot of options about where to live and where to work. And I think that is very real. I'm not a New York political. reporter, so I don't know how serious the threats of sickouts and walkoffs and the police force are, but that's absolutely something to keep an eye on. The third thing, though, I think when you talk to the business elite in the city, their main complaint is that this guy is not qualified, right? These are people who are very credentialed and they care very much about the ladder that they climbed up. And they run big organizations and they think rightly or wrongly that big organizations are hard to run. And New York City is a giant organization. It's got to,

$120 billion budget. It's got 300,000 employees. It's about as many as J.P. Morgan Chase. So they're just, they're really dismissive of his qualifications in a way that just really comes through, just dripping with, you know, real dislike of how he got where he is. Yeah, something that struck me about this election. It isn't so much about what it will do, but more about what it will say and what it says right now. And I think one of the elephants in the room with this campaign, at least to me, is it is anti-billionaire and it is anti-multimillionaire,

arguably anti-millionaire. It is a campaign that says we've had enough with rich people and the way they've run society. Maybe you didn't say that outright, but it certainly said that implicitly. To what extent is that driving the reaction? To what extent is it people on Wall Street

and business leaders, just reflexively saying, well, you've said that we're your enemy, therefore you are our enemy, and we've got a problem. Would you agree with that characterization? Yes, I would. You know, I think, broadly speaking, we kind of live in an oligopoly right now

and that I think has played out sort of most interestingly in Washington, where you had, you know, huge billionaires, in fairness, not from New York City. Right. The ones who, you know, have had Trumps here are largely from Silicon Valley and are a really different,

breed of billionaire. I spent a lot of time with people on Wall Street. They have healthy egos. They are different from the kind of only I can save the world, breed that you get out in Silicon Valley, who mistook their, you know, perhaps great technological skills and inventing capacity for technocracy and the ability to govern. But I do think you're starting to see real backlash is there. It's woven into some of the political backlash around the AI boom right now where like people are looking around at their neighborhoods and seeing these big faceless data centers going up and their electricity prices going up. And I do think there's like a bit of a bad moon rising on that front. I think that is very real. I'm not saying we're like

heads on plakes and mobs in the streets, but I do think that that's like a real political element. And it's been brewing for a long time. It goes all the way back to, you know, what drove Brexit and what got Trump elected. And, you know, this is a market show. So you'll remember the meme stock crazes. It was really eat the rich. These guys are out to get you. They are playing a game that you're not allowed to play. And that's been bubbling below the surface for years now. Yeah.

So my final question. One of the big concerns or threats that was posed was that if Mamdani were to be elected, we would see this gigantic exodus out of the city. Businesses would leave, business leaders would

leave. You know, New York City would theoretically lose out on millions and millions of dollars of tax revenue. Is that happening? Do we think that that's going to happen? What are your thoughts? It's not happening. I'm pretty skeptical of it because if you go back to the coming out of the pandemic when everyone said, well, I'm never going to go to the office again and I'm going to work wherever I want, the CEOs of the big Wall Street firms were the loudest people saying butts in seats. And it's going to be pretty hard for them to demand that their employees come back to these big office towers and them not to be there.

You know, Wall Street says a lot, but it is a money place. So you've got to look at where they're putting their money. And I would note that the other big thing that happened in Manhattan over the last week or two is that J.P. Morgan just opened a huge new glistening, very expensive, incredible piece of engineering and real estate, which is a giant bet on Midtown Manhattan. I don't know if you live in New York, but like arguably 47th Street between like, between parks, in 6th Avenue was like it's it's not where you want to spend your time all the time and they've just built a massive monument to capitalism on the on the premise that they're going to have a lot of people coming in and out of that building i think it's i think it's pretty overblown you have

certainly seen people go to florida ken griffin the big hedge fund citadel securities trading firm left chicago and kind of set up in in miami and but i don't i don't think that is a real threat ultimately these are human capital businesses so they got to be where the is, and despite it being unaffordable, and, you know, for all the reasons, young, upperly mobile, college-educated people want to live in New York, and there is still

hundreds of applicants for every seat available in that J.P. Morgan office tower. Yes. As much as we complain about it, we are still here. I'm still here, too. I'm still here. I'm unemployable outside of the city, so I'm hoping everyone that I cover six around. No choice.

Liz Hoffman, business finance editor at Santa Fe, really appreciate your time. Thanks, Ed. Pleasure. Well, yesterday we got into the election. We discussed what it means and why it matters. And if you want my Mamdani take, then go ahead and listen to yesterday's episode. We're not going to rehash it now.

But I will take this moment to highlight something that will be relevant to the conversation moving forward. And that is this question of what Mamdani will do to the New York business world. More specifically, will all the New York businesses and all the New York business leaders leave? Will they go to Florida? Will they go to Texas?

Or perhaps will they leave America entirely? Now, that might sound like kind of a ridiculous question. Maybe it sounds hyperbolic. But let's not forget all the threats that we heard from all these leaders in the months leading up to this election. Let's not forget what all these people said about what they would do and what would happen if Mamdani indeed were elected. And that is, they said that they would leave, whether it's John Katzumatidis, who said he would sell all of his New York

offices and move out if Mamdani won, or Dave Portnoy, who said he would move his company out of New York, if Mamdani won, or Bill Ackman, who said we'd see this giant exodus out of New York, or all of these anonymous bankers who told all of these press outlets that, they were heading for the doors. In fact, one survey found that 9% of New Yorkers said they would quote, definitely leave if Mamdani were elected as mayor. This was the story they told us. This was the story they wanted us to believe. And look, it's a good story. In fact, it is a famous story. It is the story of Atlas Shrugged, which is, of course, Ein Rann's most famous work. And for those of you who don't know the plot, essentially a group of business.

leaders get together and they form their own little society because government is overreaching. It's too burdensome and because taxes are too high. And so that is essentially the story that we were told. It's the story that Bill Ackman was telling us. And by the way, I'm sure his perspective is at least somewhat informed by that book. But now the question remains, will they actually leave? Or was this just a fun story? A way to wrap. battle the cage. Well, I don't know, and I guess we'll see. But let me just read you Bill Ackman's latest tweet. He said, quote, at Zohran Mamdani, congrats on the win. If I can help New York City, just let me know what I can do. End quote. I get the sense that Bill

Ackman isn't leaving. And I also get the sense that others aren't leaving either. Here's a business insider headline from yesterday. Quote, business leaders say they can live with Mamdani. Here's Bloomberg. Quote, Mamdani gets wary Wall Street support after New York City election. Here's another headline. Quote, rich New Yorkers who fear higher taxes just can't quit the city.

So for all that talk about this mass exodus of all of the business leaders in New York, it certainly appears that they are more than willing to at least try to figure out a way to stick around. And again, we don't know yet. We're only a day in.

So let's check back in seven or eight months, and let's see if 9% of New Yorkers actually did leave. But if they don't, if they don't leave, well, I think it would be fair to say that these were empty threats and they don't hold water. Yes, you may not like your mayor, but the reality of New York City is it's pretty great. And that's why you actually are willing to pay these high taxes. And this is all to say next time this crops up in either a mayoral race or a Senate race or maybe a presidential race and people and businesses start saying, I'm going to leave, I'm out of here. Let's just remember what happened in New York. Okay, that's it for today. This episode was produced

by Claire Miller, edited by Joel Patterson, and engineered by Benjamin Spencer, or associate producer is Alison Weiss. Our research team is Dan Shalon, Isabella Kinsel, Chris Nodonohue, and Mia Silverio, and our technical director is Drew Burroughs. Thank you for listening to Profty Markets from Profitimedia. If you liked what you heard, give us a follow. I'm Ed Elson. Tune in tomorrow for our conversation with Bradley Tusk.