Palantir shares fell 10% on Wednesday, and continued to slide 5% in premarket trading on Thursday, following the news that CEO Alex Karp planned to sell more than $1 billion worth of his shares and that the Pentagon was considering budget cuts over the next five years.

Palantir disclosed that Karp's new trading plan provides for a sale of up to 48.9 million shares, which could be worth up to $1.23 billion, according to Barron's. Palantir reported the change in a Tuesday filing with the Securities and Exchange Commission.

In another development, Defense Secretary Pete Hegseth reportedly wants senior Pentagon leaders and other top military officials to come up with a plan to cut the defense budget over the next five years, according to the Washington Post.

Palantir, which has seen its stock soar by almost 50% this year, is a major US defense contractor. It also sells technology and artificial intelligence products to other allied governments and private companies.

Palantir's stock plunge ended a four-day winning streak. It also underscored the data analytics company's reliance on government and defense spending.