Palantir Technologies, a prominent software company, experienced a significant drop in its stock value on Wednesday afternoon following a report from The Washington Post. The outlet revealed that the Pentagon is preparing for potential defense budget reductions that need to be finalized by February 24, raising concerns about the potential effects on the major defense contractor. Palantir’s shares plummeted as much as 12% during the afternoon before closing down 10% at $112.06, which erased nearly two weeks of gains for the company.
– Around 3:50 p.m. EST, Palantir shares dropped 12%, eventually closing down 10%.
– The decline started after a report indicated that Defense Secretary Pete Hegseth has tasked military leaders with devising budget cut plans aimed at reducing the defense budget by 8% annually over the next five years, based on information from unnamed officials and a memo reviewed by the Post.
– Before the news broke, Palantir’s stock price had remained stable and even saw slight gains in the late morning session.
– The proposed budget cuts, which need to be submitted by February 24, would exempt specific areas like southern border operations, nuclear weapons, one-way attack drones, and missile defense. If fully implemented, these proposals could result in a reduction of tens of billions of dollars from the Pentagon’s budget each year until 2030.
– The Defense Department has not yet responded to inquiries from Forbes regarding the report.
– The estimated net worth of co-founder Peter Thiel decreased by 7.6%, bringing it to approximately $19.6 billion on Wednesday. CEO Alex Karp’s fortune dropped 8% to an estimated $9.7 billion, as Thiel’s holdings in Palantir constitute around three-quarters of his wealth.
– Since 2009, Palantir has secured over $1.3 billion in defense contracts based on government spending records.
Palantir, known for its surveillance and defense software utilized by military and law enforcement agencies, has seen considerable stock market success this past year, rising 47% since January and a staggering 358% since February of the previous year. Analysts attribute their recent growth partly to advancements in artificial intelligence, positioning the company as a robust player in the ongoing AI boom. The news regarding potential cuts comes amid broader efforts by the Trump administration to reduce federal spending and reshape various government functions, an initiative that has faced mixed results and legal challenges.
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