Palantir Technologies (NYSE:PLTR) has been one of the hottest stocks on the market this year, with shares up over 246% this year at the time of writing.
CEO Alex Karp took a victory lap after his company’s most recent earnings results, saying the results were so strong that “I almost feel like we should just go home.” He later lashed out at all critics who questioned his sanity by 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 Palantir stock. This naturally begs the question: should investors follow Karp’s lead and sell Palantir stock?
Karp has been a fairly consistent seller of Palantir stock since late 2020, using a so-called Rule 10b5-1 scheme. Under these plans, company executives and other insiders drafted sales instructions to brokers to sell shares based on a variety of parameters. It can be as simple as selling a fixed number of shares on fixed dates, regardless of price, or it can use a series of much more complicated triggers.
Karp appears to be using a more complicated set of triggers, but whatever they are has led to a huge increase in sales by the CEO in the past few months. All of these recent sales occurred through the exercise and subsequent 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 before the win, he exercised options and sold another 5.66 million shares at an average price of $45.01, taking home $254.6 million. He then exercised options immediately after the win and sold more than 12.3 million shares at an average price of $52.71, netting $650.6 million in proceeds.
Before the sales acceleration, Karp’s sales were between $15 million and $22 million.
Karp wasn’t the only insider selling shares after earnings. Chief Accounting Officer Heather Planishek and Director Lauren Friedman Stat also sold shares through 10b5-1 plans.
This isn’t the first time Palantir has seen major insider selling, with Chairman Peter Thiel setting up a Rule 10b5-1 scheme and quickly selling more than 28.5 million shares in September and early October.
Palantir is undoubtedly a great company. It initially proved itself by providing data collection and analysis services to the US government, helping it with mission-critical tasks such as the fight against terrorism and tracking COVID-19 cases. Since then, it has become a big winner in the field of artificial intelligence (AI), with the US commercial sector now embracing its AI platform.
