Momentum Meets Markets Skeptic

Markets have been behaving oddly over the past two days — maybe a long-awaited sector rotation, or just thin summer trading paired with optimism over how aggressively the Fed might cut rates.

Andrew Left Says Palantir’s Valuation Outpaces Even Nvidia’s

Small caps and homebuilders have rallied, but momentum giants have stalled. Leading that group is Palantir (PLTR -1.39%), up 144% year-to-date, making it the S&P 500’s top performer. Its surge has pushed valuations to extreme territory — 242x forward earnings and 137x sales, according to FactSet.

Short-seller Andrew Left of Citron Research thinks that’s unsustainable.

“I like Alex Carp, the company’s mission, and its leadership,” Left said on Fox Business. “But even if Palantir traded at Nvidia’s 2023 multiples, the stock could still drop by two-thirds — to about 35x sales. You can’t be a big data company and tell investors to ignore big data.”

Left noted that no company with such lofty multiples has avoided a 50% correction. He also pointed to competition from Databricks, a rival with similar revenue and more corporate customers, rumored to be going public this year.

Though he admits he could be wrong and still holds positions in Apple and Amazon, Left sees Palantir as dangerously overpriced.

Separately, Left is battling SEC and DOJ charges over his short-selling markets activities. His attempt to dismiss the case was rejected in July, with trial set for March.