Burry still bearish on Palantir despite Trump endorsement By Investing.com

Michael Burry reiterated his bearish Palantir stance, saying he still holds June 17, 2027 $50 puts and Dec. 19, 2026 $100 puts after starting the short in fall 2025. He said Palantir’s fundamental value is well under $50/share, versus a Friday trading level around $127, even as Trump’s endorsement lifted the stock intraday. The shares were still on track for about a 13% weekly decline and roughly 28% losses in 2026.

Analysis

The key read-through is not about one stock, but about how policy-driven momentum can temporarily overwhelm fundamentals in high-beta software names. When a security is already de-rating alongside the broader software complex, a political catalyst can force a sharp but usually short-lived squeeze as systematic and retail flows chase headline risk; that makes the next 1-3 sessions vulnerable to an air-pocket if the squeeze exhausts. For PLTR specifically, the market is still pricing a premium multiple that leaves little room for sentiment to mean-revert; once the news premium fades, valuation gravity tends to reassert itself quickly.

The second-order effect is on option supply and dealer positioning. A visible bearish public position can draw speculative call buying from contrarian traders, but the more durable consequence is elevated implied volatility and richer downside protection demand, which improves the economics of short-dated hedges. If the name remains below recent support for several sessions, dealers can unwind hedging in a way that amplifies downside because the stock has become a crowded narrative trade rather than a pure fundamentals story.

The contrarian risk is that this becomes a reflexive political trade instead of a fundamentals trade. If the administration keeps signaling favorably, multiple compression can be delayed for weeks, especially if AI/software sentiment broadly stabilizes; in that case the stock can overshoot to the upside even without earnings revision support. Still, the longer horizon remains unfavorable unless revenue growth re-accelerates or margins surprise meaningfully, because the gap between price and plausible intrinsic value remains too wide for sustained ownership without continuous narrative support.

Key Decisions for Investors

• Initiate a tactical short PLTR only on strength, targeting the post-headline squeeze zone; use a 2-4 week horizon and size modestly because political catalysts can extend momentum, but expect poor asymmetry once the headline fades.
• Prefer long-dated put spreads over outright puts in PLTR (e.g., 6-12 month horizon) to reduce theta bleed; best risk/reward is on a retreat from elevated implied volatility after the current news spike.
• Pair trade: short PLTR vs long a diversified software basket or index exposure over the next 1-3 months; the thesis is that political idiosyncrasy decays faster than sector fundamentals, so relative underperformance can persist even if the group stabilizes.
• For holders of PLTR, sell upside calls against stock into the volatility pop; this monetizes the news premium while leaving room to participate if the stock grinds higher, with the main risk being a continued politically driven squeeze.
• Watch for earnings and guidance revisions over the next 1-2 quarters; if operating metrics do not materially improve, treat any move above current levels as vulnerable to a 15-25% retracement once sentiment normalizes.