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Michael Burry Is Betting Against Palantir Again—Should Investors Care?

Authored by Chris Markoch. Publication Date: 8/18/2026.

Michael Burry is at it again. The investor who became legendary as “The Big Short” is doubling down on his bearish position in Palantir Technologies (NASDAQ: PLTR). In his Substack newsletter, Cassandra Unchained, Burry announced that he purchased out-of-the-money put options on PLTR stock expiring in March 2027. The contracts reportedly have strike prices in the low- to mid-$100 range.

If Burry’s bearish bet is right, PLTR could fall to the levels it reached in late June. On the one hand, it’s easy to see why Burry would short PLTR. The stock is up about 30% over the last 30 days, with most of that gain coming after the company’s Q2 earnings report, which was stellar by nearly every measure.

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Revenue grew 93% year over year to $1.94 billion, U.S. commercial revenue jumped 149% to $764 million, and the company closed 220 deals worth at least $1 million. Adjusted free cash flow came in at $1.22 billion, representing a 63% margin. Palantir also had $9.2 billion in cash and no debt on its balance sheet.

It’s Really More of the Same From Burry

In the interest of accuracy, this isn’t a new trade for Burry. Essentially, he is rebuilding an earlier bearish bet, one that he partially covered when PLTR reached $107 in June. This time, Burry is taking advantage of cheaper premiums to take a second bite at the apple.

The question is why. Burry doesn’t offer a new rationale, so this appears to be a continuation of two major themes:

• Valuation – Burry has likened Palantir’s current valuation to a “sandcastle.” He estimates that PLTR is trading at 16 times its intrinsic value and has said the stock will be worth less than $1 in the long run. Hyperbole aside, Palantir is expensive by conventional metrics.

• Accounting Concerns – Ever since Palantir went public through a direct listing in 2020, many investors have been concerned about the company’s heavy reliance on stock-based compensation. Burry believes the company is underreporting the level of that compensation, which he estimates at approximately $5 billion over the past year.

Breaking Down Burry's Bet

The valuation question is not new and will continue to concern some investors until it is resolved. Analysts have been raising their price targets for PLTR, which now has a consensus price target of $192.19.

Stock-based compensation is a trickier issue. Burry’s argument hinges on real accounting mechanics. Under generally accepted accounting principles (GAAP), stock-based compensation is expensed at its grant-date fair value and then spread over the vesting period. This is true regardless of what the stock is worth by the time those shares actually land in an employee’s account.

If Palantir granted restricted stock units (RSUs) when its shares traded in the $30s or $40s, the income statement would reflect only that original, pre-rally value. The market value of the shares once they vest and are issued can be much higher. That gap is real, and it is the source of Burry’s “underreporting” claim.

But is the pace of that compensation actually accelerating? Quarterly GAAP stock-based compensation expense has climbed for five straight quarters, from roughly $155 million in Q1 2025 to $265 million in Q2 2026, including a 32% sequential jump in the most recent quarter.

That said, annual comparisons are muddier, complicated by a one-time acceleration in 2024 tied to Market-Vesting Stock Appreciation Rights (SARs) that were triggered when the stock closed above a $50 threshold. The recent quarterly trend, however, is unambiguous: The dollar cost of compensation is rising, and it is rising faster than in prior quarters.

None of this shows up as a cash cost, though. Stock-based compensation is a noncash expense that is added back on the cash flow statement, which is exactly why Palantir’s free cash flow keeps climbing even as its compensation bill grows.

The real cost to shareholders is dilution. Each vested RSU adds a new share to the total, and Palantir’s diluted share count has grown to roughly 2.57 billion. Rising aggregate free cash flow doesn’t tell you whether free cash flow per share is keeping pace, and per-share results are what ultimately drive your return as an investor.

Why Palantir Is Still Worth Owning

Ultimately, the proof is in the performance. Palantir continues to deliver strong year-over-year growth in every important and measurable category. That includes a Rule of 40 score of 155%, up from 68% just two years ago. That trajectory outpaces every other top-100 company by market capitalization, including NVIDIA (NASDAQ: NVDA).

That’s important to remember when considering Burry’s bearish bet. He isn’t wrong that dilution is real, that GAAP compensation expense understates the market value of what’s being handed out, or that the stock is expensive on a price-to-sales basis.

But “expensive” and “overvalued” aren’t the same claim. A company growing revenue 93% while expanding margins and generating more than $1 billion in quarterly free cash flow is not the profile of a business running on accounting sleight of hand.

Burry’s bet isn’t crazy. It’s a real, defensible read on dilution mechanics. It’s also a bet that has been wrong for a while now, and the operating numbers keep making it harder for him to win.

At some point, institutional investors will come off the sidelines. That could raise the stock’s ceiling, but it could also firm up its floor. That’s why a better strategy is to hold PLTR through any volatility and treat any pullbacks as opportunities to accumulate.