Palantir CEO Alex Karp Blasts Michael Burry After Short Bets Revelation

Key Takeaways:

• Palantir CEO Alex Karp criticizes Michael Burry for shorting Palantir and Nvidia.
• Karp calls shorting both companies 'insane'.
• Palantir shares fell 8% despite Q3 earnings beating expectations.
• Karp believes short sellers' behavior is 'outrageous'.
• Burry disclosed $1.09 billion in short positions against Palantir and Nvidia.

In the wake of disclosures that investor Michael Burry, famed for his role in 'The Big Short,' had placed bets against Palantir and Nvidia at the close of the last quarter, Palantir's CEO Alex Karp did not hold back. He launched a fierce rebuke against short sellers, singling out Burry by name.

"The fact that he's shorting two companies that are making tons of money is just bizarre," Karp said in an interview on Tuesday. "The idea of shorting chips and ontology is just a crazy idea."

Karp added, "He's effectively shorting AI... which is us and Nvidia."

Despite the software company’s third-quarter results exceeding Wall Street expectations and offering optimistic guidance, Palantir's stock still plummeted 8% on Tuesday. Investors are increasingly wary of high valuations in AI-related stocks. Palantir's stock has surged 173% this year, with a forward price-to-earnings ratio as high as 228. Nvidia, up over 50% this year, also declined 4%.

Speaking about the short sellers, Karp stated, "I actually think the behavior is outrageous, and I will celebrate gleefully when they're proven wrong."

A filing showed that Burry’s hedge fund, Scion Asset Management, disclosed put options with a notional value of approximately $187 million against Nvidia and $912 million against Palantir as of September 30. The filing did not specify the strike price or expiration dates of these contracts.

It is currently unclear whether Burry profited from Tuesday's stock declines. The filing reflects his position at the end of September, and he may have since adjusted his portfolio. Burry declined to comment on his positions.

Karp said, "It's not even clear he's actually short us. It's quite possible he's just thinking, 'How do I unwind this and not look like an idiot?'"

Prior to this disclosure, Burry posted a cryptic message on social media last week suggesting renewed caution towards the market. He wrote to his 1.3 million followers on the platform, "Sometimes, we see bubbles. Sometimes, we can do something about it. But sometimes, the only thing to win is to get out and watch."

Burry rose to fame for accurately predicting and betting against mortgage-backed securities before the 2008 financial crisis, a feat chronicled in Michael Lewis’s book ‘The Big Short’ and the Oscar-winning film of the same name.

“For the short-sellers, it’s very complicated… frankly, I think what’s happening here is market manipulation,” Karp said. “We delivered our best results ever. It’s not even clear he’s doing it to unwind his positions. I mean, these people, they pretend they have morals, and they’re actually shorting one of the greatest companies in the world.”