'No longer a stock but a full casino': Palantir will lose one-third of its value by year-end after surging more than 300% since going public, says short-seller Citron Research

Arnd Wiegmann/Reuters

• Citron Research initiated a short position on Palantir shares on Friday, saying the stock's 300% leap since its September 30 direct listing is unsustainable.
• The short-selling firm expects Palantir to tumble roughly 33% to $20 by the end of the year.
• "As traders looking for short exposure, Palantir is no longer a stock but a full casino," Citron said in a tweet.
• The news did little to curb investor enthusiasm. Palantir soared as much as 15% on Friday morning before paring gains.
• Watch Palantir trade live here.

Palantir will sink roughly 33% in two months as reality catches up with its massive rally, Citron Research said Friday.

The short-selling firm established a year-end price target of $20 for Palantir shares in a tweet. The data-mining firm's shares are up more than 300% after their September 30 direct listing. Citron's target is still double Palantir's debut price, but the firm said its two-month rally is unsustainable for the stock.

"What a run the past month for all. But as traders looking for short exposure, Palantir is no longer a stock but a full casino," Citron said.

Read more: Berkshire Hathaway expert Dr John Longo explains why Warren Buffett's company bet big on pharma, dumped Costco and JPMorgan, and smashed its buyback record last quarter

The new short position did little to quash investors' bullishness. Palantir leaped as much as 15% before paring gains, placing shares at a new intraday record.

The stock enjoyed strong momentum through November after President-elect Joe Biden emerged as the winner of the 2020 election. Biden's victory prompted speculation that the new administration would cut military spending. The Defense Department already serves as one of Palantir's biggest customers, and budget cuts could drive more business to the company's lower-priced software from traditional providers.

Palantir traded at $30.69 as of 11 a.m. ET Friday. The company has two "buy" ratings and three "hold" ratings from analysts.

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