Michael Burry Says Palantir's Books Look More Like a Consultant's Than a Software Company's
2026-09-06 03:26
•Daniel Sparks •The Motley Fool
••• ••• Axe Cap view
Palantir’s Numbers Raise Red Flags for Software Purists
Michael Burry questions Palantir’s true business model, hinting at valuation risks.
Michael Burry’s critique of Palantir is a useful reminder to look beyond headline revenue growth. Palantir shows signs more typical of a consulting firm – slower cash collection, customer concentration, and deferred revenue like Accenture rather than a traditional high-margin software business such as Salesforce. This suggests the company may be booking revenue without the associated cash flow strength expected from SaaS companies. For South African investors, this means caution is warranted with tech counters that similarly stretch for growth narratives. While Palantir itself isn’t listed on the JSE, the USD/ZAR exchange rate is a key barometer; it tends to weaken when global investors turn cautious on US growth-oriented tech stocks. Should Burry’s warning prove right, expect higher risk-off flows into the rand and some local tech favourites like Naspers and Prosus to take a hit. But if Palantir continues beating estimates with solid cash flow, this bearish view could quickly unravel. this is just our opinion and not financial advice
For now, trim exposure to offshore tech-heavy stocks via Prosus, and watch the USD/ZAR closely. Stay liquid and ready to buy on a sharper sell-off caused by renewed risk aversion.
- Prosus
- USD/ZAR
- Palantir continues strong revenue and cash flow growth
- USD/ZAR moves driven by unrelated domestic factors
6/10
Michael Burry, the investor behind 'The Big Short,' argues that Palantir Technologies' financial profile resembles a consulting firm rather than a software company, citing faster-growing accounts receivable than revenue, concentrated customer payments, and deferred revenue ratios similar to Accenture. Burry holds put options betting against the stock and suggests it could fall from its current $420 billion valuation to below $100 billion, though the company reported strong 93% year-over-year revenue growth.
Our take is based on reporting first published by The Motley Fool.