The market has rarely witnessed a reversal as dramatic as what happened to Palantir Technologies (PLTR). Once a niche defense contractor, Palantir rode an AI and data analytics boom to market stardom. After soaring over 400% the past year, the AI darling collapsed in spectacular fashion, shedding more than 15% across six consecutive trading sessions and erasing a staggering $73 billion in market value.
This stunning downturn handed short sellers a rare victory, generating over $1.6 billion in profits, even as these same traders had been nursing $4.5 billion in paper losses earlier in the year.
The intensity of this bearish momentum has created unprecedented demand for tactical trading instruments. The Defiance Daily Target 2x Short PLTR ETF (PLTZ), has emerged as the go-to vehicle for investors seeking amplified exposure to Palantir's downside.
With cash-rich short sellers making headlines and ETF innovation hitting overdrive, could PLTZ be the next billion-dollar trade? Let’s find out.
Overview of PLTZ
The Defiance Daily Target 2x Short PLTR ETF, hits the market with a very pointed focus: it aims to deliver -200% of Palantir Technologies’ daily share price moves. That means for every 1% Palantir drops in a day, PLTZ is designed to climb 2%; likewise, a 1% surge in Palantir can cut PLTZ's return by 2%.
The approach here is rooted in short-term, high-leverage exposure and not a “set and forget” affair, but a way to mirror and then amplify Palantir’s daily direction, always recalibrated at close. The strategy involves using swaps and synthetic positions, not by holding Palantir itself, but by tracking its moves through financial instruments meant to reset exposure every day.
PLTZ comes from Defiance ETFs, a fund family known for pushing into the niche corners of the ETF universe. Since its inception on June 5, 2025, and first trade on June 6, the ETF has steadily grown its managed assets to about $27.6 million. The fund lists a $1.29% management fee, running above most traditional products but in line with similar leveraged ETFs.
Its holdings are structured for one thing: precise, inverse exposure to Palantir, and the portfolio reflects this with swaps featuring the stock at their core, plus significant positions in cash and government obligations. The ETF’s synthetic Palantir swap forms the heart of the exposure at -199.91% of net assets, while cash and equivalents, listed at 282.15%, and a government obligations fund, First American Government Obligations Fund (FGXXX) (17.75%), balance the structure out.
The cash position may look unconventional, but it supports the fund’s leveraged structure and margin needs. Since its launch, PLTZ has been anything but static. The ETF's price was down to $9.51 as of Aug. 27, down 9% for the past month. This reflects just how volatile tracking a single tech stock, especially on a double-short basis, can be.
PLTZ stands out for trading activity as volume soared to 14,631,156 shares in the current month from just 962,000 the previous month. This makes it one of the more intensely traded ETFs in this space lately.
Sentiments Around Palantir Now
Palantir’s setup has shifted quickly. With Defense Secretary Pete Hegseth calling for an 8% annual cut to defense spending over the next five years, a key source of Palantir’s growth is now facing pressure, especially given that government contracts contributed $1.57 billion last year, up 28%, alongside $1.3 billion from commercial, up 29%.
Insider activity hasn’t helped the optics. CEO Alex Karp recently sold 409,072 shares for more than $60 million, part of a pattern that, even when tied to RSU vesting, keeps questions in play about timing and signals. It doesn’t change the pipeline, but it does color sentiment when headlines are already busy with policy risk.
On the research desk side, the tone isn’t uniformly upbeat. Senior J.P. Morgan strategist Dubravko Lakos-Bujas issued a cautionary note, calling Palantir one of the most “overcrowded” tech names for the second half of the year.
He points to high-beta momentum and feels that with so many already on board, even a minor bump in the road could trigger an outsized reaction. That fits with the broader read-through, as the aggregated rating leans “Hold” across roughly 22 analysts.
Conclusion
In sum, the short-selling frenzy around Palantir has given rise to tools like PLTZ for those looking to play the downside without getting tangled in the stock itself. With budget cuts, insider selling, and a crowded trade, the risks feel real. All things considered, unless Palantir surprises everyone with new growth drivers in the months ahead, the stock is more likely to drift lower or stay volatile through year-end than to put in another meteoric run. For now, PLTZ remains the ETF to buy if you want to get in on the short selling mania in PLTR stock.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
