Despite exceptionally strong results, Palantir has recently struggled to bring its valuation back to the levels at which it regularly traded in 2025.
Michael Burry, the legendary analyst, and one of Palantir’s most outspoken critics, has taken advantage of this weakness in the stock’s valuation. Burry’s allegations are serious.
The dispute between Burry and Palantir is not new. It might seem, however, that the initiative has remained on the company’s side, until recently from Denver, and now from Florida. Palantir has kept its valuation elevated despite recent pullbacks, and its quarterly results continue to show enormous growth, usually above expectations.
Burry has previously argued that Palantir’s model is not scalable because every integration is built “bespoke,” and that the company supposedly does not have its own AI solutions, relying instead on off-the-shelf offerings from, among others, OpenAI and Google. Palantir is an extremely “closed” company, and Burry is unable to back up his words with hard evidence; nevertheless, he maintains that the company is de facto a consulting firm pretending to be a SaaS company, which in turn pretends to be an AI company. A few days ago, however, he published further analyses in which he argues not only that the business model is suboptimal or the valuation unrealistic, but that there is outright accounting fraud.
Palantir is allegedly using the so-called “channel stuffing” technique—i.e., “aggressive” and “creative” revenue recognition that can make the company report results higher than they truly are. One “symptom” of such a practice is accounts receivable growing faster than revenue. Indeed, in Palantir’s case, receivables have grown faster than revenue in 9 of the last 12 quarters. Over the period examined, receivables increased twentyfold, while revenue rose only sixfold, and days sales outstanding increased from 20 to 67 days.
However, beyond a company’s financial analysis, an analyst should also have “Occam’s razor” among their tools. Burry’s analysis has shown only that the payment cycle is lengthening, which is negative in itself but does not necessarily indicate a deterioration in the company’s condition. Palantir is growing quickly, and its contracts are large and complex. Everything suggests that the company is simply growing faster than it can integrate its solutions with new customers—pointing more to an embarrassment of riches than an imminent collapse. Palantir’s cash-flow structure may resemble defense contractors more than a typical technology company.
Ultimately, Michael Burry’s thesis may prove correct, but the evidence presented so far is not sufficient to confirm it.
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