How Michael Burry's Big Short Playbook Targets Palantir's Valuation

Michael Burry, the legendary investor whose contrarian bet against the 2008 financial crisis inspired the acclaimed film “The Big Short,” has trained his analytical lens on Palantir Technologies—and the verdict is bearish. In a provocative assessment, Burry concluded that the data analytics company’s stock is significantly overvalued, setting a fair value estimate of just $46 compared to current trading levels. This latest commentary adds substantial weight to growing concerns about whether Palantir’s recent market momentum is justified by underlying fundamentals.

Burry’s $46 Valuation Case: Challenging Market Assumptions

Michael Burry’s formal valuation study presents a striking contrast to Palantir’s market price. According to his recent Substack analysis, the renowned investor from The Big Short assessed Palantir’s core financial metrics and determined the company’s intrinsic value sits roughly three times below current trading levels. Burry’s critique centers on two primary concerns: the company’s elevated expense structure and what he characterizes as potentially inflated profit margins that may not withstand closer scrutiny.

Notably, while Burry has not taken a direct short position in Palantir (ticker: PLTR), he has deployed put options—a hedging strategy that profits if the stock declines. This measured approach suggests conviction tempered by market humility, distinguishing his positioning from pure short-seller aggression.

Why The Big Short Investor Remains Skeptical

The core of Burry’s skepticism revolves around sustainability concerns. In his recent commentary, he stated emphatically: “I do not expect Palantir’s recent success to last.” This pronouncement reflects his historical pattern of identifying inflated valuations before market corrections occur—the same prescience that made The Big Short such a compelling narrative.

Burry specifically challenged claims about Palantir’s profitability trajectory, questioning whether the company’s recent operational improvements represent genuine efficiency gains or accounting artifacts. He pointed to the business model’s high execution costs as a structural headwind that could constrain future margins regardless of revenue growth.

Market Reality: Stock Under Pressure as Consensus Fragments

Palantir shares have experienced significant turbulence since their late-year peak. The data analytics platform saw its stock price shed nearly 40% from its November record highs, with recent sessions delivering additional losses. On one recent trading day alone, shares declined nearly 5% to levels near $129, reflecting renewed selling pressure despite the company’s 2025 achievements.

The company posted strong revenue momentum throughout 2025, benefiting from accelerating adoption of its Artificial Intelligence Platform. However, this operational success has not insulated the stock from valuation compression—a pattern that invites skepticism about whether market enthusiasm got ahead of reality.

Wall Street Divergence: Cautious Consensus Despite Bullish Positioning

Interestingly, most Wall Street analysts have maintained more optimistic stances than Burry’s uncompromising assessment. According to Visible Alpha’s analyst consensus, only four of eight covering Palantir actively recommend buying the stock, with the remainder suggesting hold ratings. Even the most pessimistic Wall Street price target sits at $180—nearly four times higher than Burry’s valuation but notably below the stock’s November apex.

This divergence underscores an important market psychology: mainstream financial analysts tend to incorporate less extreme downside scenarios than legendary contrarians like Michael Burry. The fact that The Big Short investor’s thesis represents an outlier position—even among skeptical analysts—highlights the magnitude of his valuation concern.

The Bigger Picture: Historical Momentum vs. Valuation Reality

Palantir’s recent trading history provides important context. The stock more than doubled during 2025, extending a spectacular 340% surge from 2024. Such extended gains often invite critical reappraisal, precisely the moment when investors like Burry historically identify opportunities for value reversion.

Month-to-date volatility has been pronounced, with early gains following positive earnings and guidance evaporating as sellers reasserted control. The stock now trades substantially below pre-earnings levels, suggesting that even positive operational catalysts have lost their capacity to sustain upward momentum—a technical pattern Burry’s thesis would predict.

For investors monitoring Palantir, the Michael Burry perspective represents one data point in a larger debate about valuation sustainability. Whether his skepticism proves prescient—as it did during The Big Short era—or represents a premature pessimistic call will ultimately depend on whether Palantir’s business fundamentals can justify its stretched valuation multiples in coming quarters.