Michael Burry’s Bearish Bet Knocked Palantir 10% — Is It Overvalued? | Prof G Markets

Episode Overview

• The episode provides a recap of key market vitals, including a rise in major indices due to positive employment data and a spike in Treasury yields.
• It highlights significant stock movements, with Pinterest plummeting 21% while Snap surged 25% on deal news.
• The main story focuses on the conflict between Palantir's stellar earnings report and a massive, near-billion-dollar short position taken by legendary investor Michael Burry.
• The host sets up the core question of whether Palantir's high valuation is justified or if it is a prime example of a speculative AI bubble, as Burry's bet suggests.

Key Concepts

• Market Vitals Recap: The episode opens with a summary of market performance, noting that the S&P 500, Nasdaq, and Dow all climbed following better-than-expected employment data. In contrast, Treasury yields also rose due to Supreme Court skepticism about Trump-era tariffs.
• Stock-Specific News: The recap covers two major individual stock stories. Pinterest's stock experienced its second-worst day ever, falling 21% after its earnings revealed that tariffs were causing retailers to reduce ad spending. Meanwhile, Snap's shares soared 25% after the company announced a new $400 million deal in its earnings report.
• Michael Burry's Bearish Bet on Palantir: The central focus is on Michael Burry, the investor famous for predicting the 2008 financial crisis (as profiled in "The Big Short"). His firm, Scion Asset Management, has purchased put options against approximately 5 million Palantir shares, a significant bet worth nearly $1 billion.
• Valuation vs. Fundamentals: The episode highlights the contradiction between Palantir's strong financial performance and Burry's bearish outlook. The company recently reported impressive earnings that beat Wall Street estimates on all metrics, including 121% growth in US commercial sales and 63% growth in overall sales year-over-year.
• The AI Bubble Thesis: Burry's move against Palantir is framed as part of his broader belief that the market is currently in an AI-fueled bubble. The segment points to Palantir's extremely high valuation—trading at nearly 300 times earnings and 125 times sales—as a key reason it may be considered overvalued and susceptible to a correction.

Quotes

• At 00:02 - "That's how many monkeys are on the loose in Mississippi right now after a primate-carrying truck crashed in Jasper County." - The host's humorous opening to introduce the "number of the day" and grab the audience's attention.
• At 00:50 - "Pinterest had its second worst day ever, falling 21% after earnings showed that tariffs caused retailers to moderate their ad spending." - Summarizing a key market-moving event for an individual stock, highlighting the impact of macroeconomic policy on company performance.
• At 01:17 - "...news that the legendary Michael Burry made a huge bet against the stock." - Introducing the central conflict of the episode and the main reason for Palantir's stock decline.
• At 01:54 - "Well, he is the guy who correctly identified the subprime mortgage bubble before it popped in 2008." - Providing crucial context on why Michael Burry's market moves carry so much weight and influence among investors.

Takeaways

• Look beyond headline earnings. Palantir's strong financial results were immediately overshadowed by the narrative created by Michael Burry's short position. This demonstrates that a single influential investor's actions can dramatically impact a stock's trajectory, regardless of its reported fundamentals.
• Extreme valuations create vulnerability. Palantir's stock is highly susceptible to negative sentiment precisely because its valuation is so high (299x P/E). When stocks trade primarily on hype, such as the current AI boom, they are at greater risk of sharp declines when the narrative is questioned.
• Macroeconomic factors have direct micro-level impacts. The market recap illustrates how broad economic data and policy decisions affect individual companies. Positive employment figures can lift the entire market, while specific policies like tariffs can directly harm a company's business model, as seen with Pinterest's drop.