Wood's Palantir Dump: Genius Move or Just Bad Timing?
Cathie Wood's Ark Invest recently trimmed its holdings in Palantir Technologies Inc (NASDAQ:PLTR), selling 38,338 shares through the ARK Innovation ETF (ARKK). This move, valued at approximately $7.9 million (at a stock price of $207.18), raises some eyebrows considering Palantir's impressive third-quarter earnings. The company reported revenue of $1.18 billion, exceeding the anticipated $1.09 billion, and adjusted earnings of 21 cents per share, surpassing the forecasted 17 cents per share. What gives?
The Palantir Paradox
Palantir's U.S. commercial revenue soared by 121% year-over-year, reaching $397 million. That's not just growth; that's a hockey stick. And yet, Ark is selling. It’s a discrepancy that begs the question: Is Wood seeing something the rest of us aren't, or is this a case of short-term portfolio rebalancing overshadowing long-term potential?
Notably, Ark has been offloading Palantir stock for a week prior to this event, selling about $3.9 million worth of shares on the Thursday before. It's a pattern, not a one-off. Makes you wonder if there’s an internal risk assessment at Ark that we aren't privy to. Could it be concern about Palantir's reliance on government contracts, which, while lucrative, can be subject to political winds? (That’s something Palantir investors should always keep in mind.)
Meanwhile, Ark Invest is making a substantial investment in Bullish (NYSE:BLSH), acquiring a total of 238,346 shares across ARKK, Ark Fintech Innovation ETF (BATS:ARKF), and ARK Next Generation Internet ETF (BATS:ARKW). This purchase, valued at approximately $11.9 million (stock closed at $50.26 on Monday), signals a strong belief in the cryptocurrency exchange backed by Peter Thiel. It's a classic case of "buy the rumor, sell the news," but in reverse – sell the solid earnings, buy the buzzy IPO.
Decoding the Move
The Benzinga Edge Stock Rankings indicate Palantir stock has a Momentum in the 97th percentile. That's impressive, but momentum can be a fickle mistress. Ark's decision might not be a reflection of Palantir's intrinsic value but rather a strategic allocation shift. The fund could be rotating profits from a high-momentum stock into a potentially undervalued one, or simply reducing exposure to a single stock to maintain diversification.
I've looked at hundreds of these filings, and it's rare to see such a clear divergence between a company's performance and an investor's actions. It’s possible Ark’s internal models, which probably incorporate factors beyond simple revenue growth (like customer acquisition cost or long-term contract value), are flashing warning signs that aren’t immediately obvious to the public.
It’s also worth considering the broader market context. With interest rates rising and inflation remaining stubbornly high, growth stocks, even those with strong earnings, can face increased pressure. Ark, known for its high-growth bets, might be proactively de-risking its portfolio.
The Data Doesn't Lie (But It Can Be Misleading)
Ark's move is a calculated one, driven by factors beyond Palantir's impressive quarterly numbers. It’s a reminder that investing is a game of probabilities, not certainties, and that even the most promising companies can fall out of favor with sophisticated investors. The question now is whether Ark's bet on Bullish will pay off, or if they'll regret trimming their Palantir position as the company continues its upward trajectory. One thing's for sure: this is a situation worth watching closely.