Burry Covers Palantir Short — Then Reposts His Critique

The Big Short investor halved his bearish bet in late June before reposting his takedown. The options market is pricing a battleground, not a collapse.

Michael Burry reposted his 5,000-word Palantir takedown to X on July 23. The piece is a detailed demolition of Palantir's business model. Three weeks earlier, he had already covered half his short position.

The signal is not in the essay. It is in the timing.

Burry published "Palantir's New Clothes: Foundry, AIP, and the Failure of Reason" on his Substack in February 2026, when PLTR traded around $153. The core argument: Palantir is not a software company. It is a services firm dressed in software clothing, and its valuation implies recurring revenue leverage that does not exist.

He pointed to the Forward-Deployed Engineer model, where teams spend months on-site customizing installations. He quoted a former Palantir engineer from the Steinberger biography: "They weren't going to generate enough value for organizations that they'd want to pay us enough to make it worthwhile for us." He noted that Palantir lost money for 20 straight years before turning profitable in Q4 2022, and that the company nearly ran out of cash multiple times, including a lifesaving SoftBank investment in 2019.

The essay was well-researched. It was also backward-looking.

The Quarter That Changed the Math

Between February and June, Palantir reported Q1 2026 results that made the bear case harder to land:

• Revenue: $1.633 billion, up 85% year over year — the fastest growth rate since the company went public
• U.S. Commercial: $595 million, surging 133% (would have been 143% without a government transition at one major customer)
• GAAP Net Income: $871 million, a 53% margin
• Adjusted Free Cash Flow: $925 million, a 57% margin
• Cash vs Debt: $8 billion in cash against $212 million in total debt
• Net Dollar Retention: 150%, up from 139% the prior quarter

On the earnings call, CTO Shyam Sankar delivered the company's one-sentence rebuttal to the "it's just services" critique: "Tokens are the new coal. AIP is the train. As inference gets cheaper, the number of tasks you can economically assign to AI grows exponentially. More tokens means more slop. You need a system that can prevent the economic harm so you can harness the economic value. That system is AIP."

CFO David Glazer added that the 150% NDR "does not include revenue from new customers acquired in the past twelve months, it has not yet fully captured the acceleration and velocity in our U.S. business." Total remaining deal value reached $11.8 billion, nearly double the prior year.

Burry Blinks

On June 25, Burry disclosed he had halved his short position around $107. He also bought long-dated December 2028 Microsoft call options and added to JD.com and Adobe, according to regulatory filings. The rotation suggests profit-taking, not capitulation — but the direction is clear.

The stock is down 19% from when he first published the essay in February, and 45% from its all-time high. He was right directionally. Whether he was right structurally remains an open question.

The Options Market: A Battleground, Not a Crash

The $95 put for December 2028 that drew attention this morning — with 2,006 new contracts opened — is one of several deep out-of-the-money LEAPS puts. But the LEAPS book is balanced. Here are the key strikes with meaningful open interest (consolidated across all expiries):

The picture is clear:

• Deep OTM puts ($35–$130): Heavy put OI, mostly new positioning — tail hedging

• Near-the-money ($135): Balanced, both sides building

• Upside calls ($150–$410): Massive call OI, especially at $200 (41K) and $390 (22K) — conviction bets on a recovery

• Put/Call ratio by volume: 0.45 (bullish)

• Open Interest split: nearly even at 0.99

• Gamma flip: $124.56 — spot closed at $124.57, literally pinned

• Call wall: $135 | Put wall: $120

• Dealer regime: Long-gamma, vol-suppressed — dealers are damping moves, not amplifying them

That is not what a structural bear case looks like in the options market. The deep OTM LEAPS puts look more like tail hedging than conviction bets.

Algo Flow: The Silent Bid

The algo flow picture is mixed but not alarming. Distribution scores have been moderate (30-50 range), well below the "flagged" threshold. Signed delta — the actual net buy/sell signature from the tape — has been drifting positive on most sessions, suggesting real buyers are absorbing the selling. The -5.9% session on July 22 showed signed delta of +0.029, meaning the drop was not driven by aggressive selling.

The Sell-Side Split

Twenty-seven analysts carry a consensus Buy rating with a mean price target of $183, implying 47% upside from current levels. But the range tells the real story:

• High: $255 (bull case)
• Low: $70 (RBC Capital, lone Underperform)
• DA Davidson: upgraded to Buy July 2, PT $175
• Wolfe Research: upgraded from Underperform to Peer Perform June 16
• Wedbush, Citi: bullish into earnings

The $70–$255 spread is extraordinary for a $300B market cap name. The Street is not disagreeing around the edges — it is having two completely different conversations.

The Question That Matters

Burry's critique will age well or poorly depending on whether net dollar retention rolls over. If the 150% NDR is a one-quarter spike driven by a few large deployments, his warning about services-compressed margins will look prescient. If it holds or accelerates, the bear case weakens further.

The options market is pricing a fight between $120 and $135, not a collapse. The algos are not fleeing. The sell-side is split but leaning bullish. Burry was right directionally — the stock is down 19% from his essay and 45% from its peak. Whether he was right structurally is a question the next earnings print will answer.

More research at bargo.ai/research.