The financial markets are a dynamic arena where fortunes can shift rapidly, and the past week has seen two prominent companies, Palantir Technologies Inc. (NYSE: PLTR) and Viking Therapeutics (NASDAQ: VKTX), come under intense investor scrutiny. Despite a year of impressive gains for Palantir, concerns over its valuation have led to a recent stock slump, fueled by vocal short-sellers. Simultaneously, Viking Therapeutics experienced a significant share plummet after its experimental weight-loss pill trial revealed higher-than-expected discontinuation rates due to side effects, casting a shadow over its promising efficacy data. These events highlight the inherent risks and challenges in both the high-flying tech sector and the competitive pharmaceutical landscape.
A Closer Look at Recent Setbacks and Their Ramifications
Palantir Technologies Inc. (NYSE: PLTR), a data analytics software company, has recently endured a five-day losing streak, shedding over 15% of its value. This downturn comes despite a stellar year-to-date performance in 2025, where its stock more than doubled, making it the best-performing stock in the S&P 500. The primary catalyst for this slump is a chorus of short-seller concerns regarding the company's valuation, which many argue has become "detached from fundamentals."
Leading the charge is Citron Research, headed by Andrew Left, who has vocally criticized Palantir's elevated valuation. Citron Research posits that Palantir's stock is excessively optimistic, drawing comparisons to OpenAI, a leader in the AI space. They argue that even if Palantir were to trade at a similar price-to-revenue (P/S) multiple as OpenAI, its implied stock price would be significantly lower, around $40 per share, still considered expensive by historical Software-as-a-Service (SaaS) company standards. Short-sellers also point to Palantir's high forward price-to-earnings (P/E) ratio of approximately 268 times its 2025 earnings and a price-to-sales (P/S) ratio of around 99 times expected sales. Further fueling skepticism are reports of aggressive insider selling, with CEO Alex Karp reportedly selling nearly $2 billion worth of shares over the past two years. The competitive landscape, featuring established giants like Microsoft (NASDAQ: MSFT) and Databricks, along with Palantir's "lumpy" contract-based revenue model, also contribute to the short-seller narrative.
Meanwhile, Viking Therapeutics (NASDAQ: VKTX) saw its shares plummet by as much as 45% following the release of top-line results from its Phase 2 VENTURE-Oral Dosing trial for VK2735, an experimental oral weight-loss pill. While the trial successfully met its primary and secondary endpoints, demonstrating statistically significant weight reductions of up to 12.2% (approximately 26.6 pounds) from baseline after 13 weeks, the market's reaction was overwhelmingly negative due to concerns over the drug's tolerability profile.
The key issue was the higher-than-expected discontinuation rates, largely attributed to gastrointestinal (GI)-related adverse events. The overall treatment discontinuation rate for VK2735 was 28%, compared to 18% for placebo, with 20% of patients discontinuing due to adverse events in the treatment arms versus 13% in the placebo arm. Notably, the discontinuation rate was dose-dependent, reaching 38% at the highest effective dose. The most common side effects reported were nausea (58% for VK2735 vs. 48% for placebo) and vomiting (26% for VK2735 vs. 10% for placebo). While the majority of these events were mild or moderate and tended to decrease with continued dosing, the market perceived these rates as a significant hurdle, especially when compared to rival treatments from companies like Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO).
Winners and Losers in the Wake of Market Shifts
In the immediate aftermath of these developments, Palantir Technologies Inc. (NYSE: PLTR) and Viking Therapeutics (NASDAQ: VKTX) are undoubtedly the primary losers. Palantir's stock has been directly impacted by the short-seller onslaught, leading to a significant erosion of its recent gains and a dent in investor confidence. The company now faces the challenge of justifying its valuation amidst intense scrutiny and proving that its Artificial Intelligence Platform (AIP) can sustain its growth trajectory and profitability to silence its critics.
Viking Therapeutics (NASDAQ: VKTX) has suffered an even more dramatic setback, with its share price nearly halving. Despite promising efficacy data for VK2735, the tolerability concerns have raised serious questions about the drug's commercial viability and patient adherence in a competitive market. This puts Viking at a disadvantage against established players and potentially delays or complicates its path to market.
Conversely, indirect winners may emerge from these situations. In the enterprise AI software space, competitors to Palantir, such as Microsoft (NASDAQ: MSFT) with its Azure AI offerings and Databricks, could potentially benefit from any perceived weakness or overvaluation concerns surrounding Palantir. Investors seeking exposure to AI might pivot to more established or seemingly less volatile options.
In the burgeoning weight-loss drug market, the challenges faced by Viking Therapeutics could solidify the positions of current leaders. Eli Lilly (NYSE: LLY), with its successful Zepbound (tirzepatide) and promising oral candidate orforglipron, and Novo Nordisk (NYSE: NVO), with its blockbuster Wegovy (semaglutide) and oral semaglutide, stand to gain. Viking's tolerability issues underscore the importance of a strong safety and adherence profile, making the offerings from Lilly and Novo Nordisk appear even more robust and reliable to investors and prescribers alike. Any stumble by a competitor in this high-stakes market can be seen as an opportunity for those with more mature or better-tolerated products.
Industry Impact and Broader Implications
The recent struggles of Palantir Technologies Inc. (NYSE: PLTR) and Viking Therapeutics (NASDAQ: VKTX) offer significant insights into broader industry trends and potential ripple effects. For the artificial intelligence sector, Palantir's situation serves as a stark reminder of the intense scrutiny on AI valuations. After a period of significant hype and investment, the market is increasingly demanding tangible fundamentals and sustainable profitability to justify lofty valuations. This could lead to a more cautious investment environment for other high-growth AI companies, prompting a re-evaluation of business models and revenue streams. It also highlights the competitive pressures from well-capitalized tech giants that are rapidly expanding their AI capabilities.
In the pharmaceutical industry, particularly within the burgeoning weight-loss drug market, Viking Therapeutics' (NASDAQ: VKTX) trial results underscore a critical lesson: efficacy alone is not enough. The tolerability profile of a drug, especially one intended for chronic use, is paramount for patient adherence and commercial success. The higher discontinuation rates due to gastrointestinal side effects for VK2735, even with impressive weight loss, could set a higher bar for new entrants into the GLP-1 agonist space. This event reinforces the competitive advantage held by companies like Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO), whose established weight-loss therapies have demonstrated more favorable tolerability profiles in large-scale trials. It may also prompt regulatory bodies to pay even closer attention to discontinuation rates and adverse event profiles in future drug approvals, emphasizing real-world patient experience. Historically, many promising drug candidates have failed not due to lack of efficacy, but due to unacceptable side effects that limit patient compliance, a precedent Viking Therapeutics now grapples with.
What Comes Next
For Palantir Technologies Inc. (NYSE: PLTR), the immediate future will involve navigating the persistent short-seller pressure and working to restore investor confidence. The company will need to clearly articulate its path to sustained profitability and demonstrate how its Artificial Intelligence Platform (AIP) can continue to drive significant, scalable revenue growth beyond its current valuation. Future earnings reports and investor calls will be critical opportunities for management to address concerns about insider selling and the competitive landscape. A strategic pivot might involve emphasizing specific, high-value commercial contracts or showcasing the unique advantages of its platform over competitors.
Viking Therapeutics (NASDAQ: VKTX) faces a more immediate and pressing challenge regarding the commercial viability of VK2735. The company's CEO, Brian Lian, has suggested that lower starting doses and/or slower dose escalation could potentially mitigate the GI-related adverse events and reduce discontinuation rates. The company will likely need to explore these strategies in future trials or analyses to improve the drug's tolerability. The market will be closely watching for updates on their development plans for both the oral and subcutaneous formulations of VK2735, and how they intend to position the drug against the formidable competition from Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO). The long-term success of VK2735 hinges on its ability to offer a compelling balance of efficacy and tolerability that encourages long-term patient adherence.
Conclusion
The recent market movements surrounding Palantir Technologies Inc. (NYSE: PLTR) and Viking Therapeutics (NASDAQ: VKTX) serve as a potent reminder of the complexities and inherent risks within the financial markets. For Palantir, the key takeaway is that even strong year-to-date performance cannot insulate a company from intense scrutiny over valuation, especially from well-resourced short-sellers. The AI sector, while promising, is maturing, and investors are increasingly demanding fundamental value over speculative growth. Palantir's ability to convert its technological prowess into consistent, profitable growth will be paramount in the coming months.
For Viking Therapeutics, the experience with VK2735 underscores the critical importance of tolerability in drug development, particularly for chronic conditions like obesity. While efficacy is a necessary condition for success, it is not sufficient. The competitive landscape of the weight-loss drug market is unforgiving, and drugs with superior safety and adherence profiles will likely dominate. Investors should closely watch how Viking addresses the tolerability concerns and whether it can refine its dosing strategies to improve patient retention. The lasting impact of these events will be a heightened focus on sustainable business models and robust product profiles across both the technology and pharmaceutical sectors, urging investors to look beyond initial hype and delve deeper into the underlying fundamentals and patient realities.