BigBear.ai Stock Plummets 60% Amid AI Market Volatility and Financial Restatements

BigBear.ai Stock Drops 60% in Just 1 Month. Is This Massive Sell-Off a Huge Buying Opportunity for Investors?

A big risk for investors when buying speculative stocks is that they can be incredibly volatile. As of Monday's close, shares of data analytics company BigBear.ai Holdings (BBAI 4.54%) were down more than 64% in just the past month. While the tech stock has a lot of potential in artificial intelligence (AI), its valuation has often fluctuated significantly, with a lot depending on investor sentiment, particularly from retail investors. Can the stock recover from this significant drop and be a good buy right now, or are you better off staying away from BigBear.ai? Is investor sentiment in AI stocks crumbling? Many AI stocks have been struggling this year. A combination of factors, such as DeepSeek's cheaper AI model, sky-high valuations, the possibility of a slowdown in AI spending, and question marks about where the economy is headed are some of the big issues which are making investors think twice about the tech sector these days. Even chipmaker Nvidia isn't immune to the effects. Its market value has fallen 14% over the past month. While that's nowhere near the decline that BigBear.ai has gone on during that time frame, it's also arguably the safest AI stock you can own; if Nvidia's struggling, then that doesn't bode well for riskier stocks like BigBear.ai. The big question is whether this is the start of a much larger sell-off in tech or if this may be just a knee-jerk reaction in the markets. But with valuations running high for some time, I'm inclined to believe that this may not be just a temporary correction. BigBear.ai's financials don't offer any help It's one thing if a sector of the market is just struggling, but if BigBear.ai is doing well, it's possible for the stock to rebound. Unfortunately, the company's underwhelming financials don't help make a case why BigBear.ai shouldn't be nosediving. It posted its year-end earnings earlier this month, and the company's top line showed just 2% growth for 2024, coming in at $158 million. Moreover, its guidance for 2025 only calls for revenue to come within a range of $160 million to $180 million. The positive development was that the company did grow its backlog, from $250 million to $418 million as of the end of last year, so there may be much more growth in the future. However, the more concerning number for BigBear.ai investors may be the $38 million the company used up in its day-to-day operating activities last year -- that accelerated from $18 million in cash burn in the previous year. If the company isn't improving its cash flow, then that heightens the risk of increased stock offerings in the future, in order to raise cash to help grow its operations; the company had just $50 million in cash and cash equivalents as of the end of 2024. This is still a highly risky and volatile stock to own BigBear.ai was a risky and speculative buy before it went on to crash in the past month, and nothing has changed since then. While its valuation is lower, that doesn't guarantee that it's going to recover from this latest decline, or that the stock can't go even lower. If you're bullish on AI, you're better off going with Nvidia or a more established tech company. BigBear.ai is still fairly unproven and while it is securing deals and adding to its backlog, it's still going to be a tough road ahead for the company and it's likely only going to continue burning through cash and accumulating losses for the foreseeable future.

Why BigBear.ai Stock Is Struggling This Week | The Motley Fool

Since last Friday, shares of the artificial intelligence (AI) decision-making platform BigBear.ai (BBAI -3.54%) are down over 14%, as of 12:07 p.m. ET on Thursday. On Tuesday, the company submitted a filing to the U.S. Securities and Exchange Commission (SEC) that said it will need to restate certain past financial statements due to prior inaccuracies. BigBear.ai expects to restate its financials for the years ended 2022, 2023, and 2024. While not final, the company did provide preliminary expectations for the new numbers but warned that they are unaudited and could change. It expects to report a smaller loss before taxes in 2022 but then higher pretax losses in 2023 and 2024. Losses in 2024 are expected to jump from about $257 million to $296 million. The main reasons for this are higher interest expense and a higher loss on the extinguishment of debt related to the company's 2026 convertible notes. Revenue, gross margin, and the company's operating losses for 2024 are not expected to change. Management could very well have this accounting blunder under control, but it certainly came at the wrong time as investors are fleeing expensive artificial intelligence stocks. The shares have fallen 67% from highs seen on Feb. 13. The company is not yet profitable and had previously traded at a multibillion-dollar market cap, making it susceptible to pullbacks. BigBear.ai certainly seems to have promise with its AI capabilities, but it's likely going to be volatile until it overcomes this hurdle and shows better progress toward profitability. I wouldn't buy anything more than a smaller, more speculative position.

BigBear.ai: Too Many Bearish Risks To Ignore (NYSE:BBAI)

High customer concentration and uncertainties in Federal Government spending pose significant risks, warranting a cautious approach for the next few quarters. BigBear.ai (NYSE:BBAI) has been a big beneficiary around the AI hype, and despite the stock pulling back significantly from its highs just one month ago, there could be some underlying risk left to come. BBAI is a SaaS Individual investor with hands-on experience in the equity markets. Largely focusing on Tech companies or major mispricings in the market. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.