Palantir Technologies (NYSE: PLTR) has been one of the hottest stocks in the market this year, with the stock trading up more than 246% year to date as of this writing.
CEO Alex Karp took a victory lap following his company’s most recent earnings, saying the results were so strong that “I almost feel like we should just go home.” Later he took a swipe at any critics who challenged his sanity in making such a comment.
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But while Karp has been celebrating the success of his company and its stock, he has also been aggressively selling shares of Palantir. This of course begs the question, should investors follow Karp’s lead and sell Palantir stock?
Karp has been a pretty consistent seller of Palantir stock since late 2020, using what is called a Rule 10b5-1 plan. Under these plans, company executives and other insiders set up selling instructions to brokers to sell shares based on a variety of parameters. It can be as simple as selling a set amount of shares on set dates regardless of price, or it could use a set of much more complicated triggers.
Karp appears to be using a more complicated set of triggers, but whatever they are have led to a huge increase in selling by the CEO in the couple of months. All of these recent sales have been through the exercise and then sale of stock options.
Karp’s increased selling began in mid-September when he exercised options and sold 9 million shares at an average price of $36.18, worth $325.6 million.
Just ahead of earnings he exercised options and sold an additional 5.66 million shares at an average price of $45.01, taking home $254.6 million. Then immediately after earnings, he exercised options and sold more than 12.3 million shares at an average price of $52.71, good for proceeds of $650.6 million.
Before the acceleration in selling, Karp’s sales were more in the $15 million to $22 million range.
Karp wasn’t the only insider to sell shares after earnings. Chief Accounting Officer Heather Planishek and Director Lauren Friedman Stat also sold shares via 10b5-1 plans.
This isn’t the first time Palantir has seen big insider selling, with Chairman Peter Thiel setting up a Rule 10b5-1 plan and quickly disposing of more than 28.5 million shares in September and early October.
Palantir is undoubtedly a great company. It initially proved itself by providing data gathering and analytic services to the U.S. government and helping it with such mission-critical tasks as fighting terrorism and tracking COVID-19 cases. It has since become a big artificial intelligence (AI) winner, with the U.S. commercial sector now embracing its AI platform.
