BigBear.ai Stock A Big Pre-Market Mover as Earnings Come in Short

BigBear.ai's stock (NYSE: BBAI) is a big extended hours mover on the NYSE, down 14% through the pre-market, as earnings missed the mark.

The company, an AI-powered decision intelligence solutions provider, has seen it's stock price trade in a very volatile range in recent months. Gains of 2.19% year-to-date leading into earnings barely tells a fraction of the story for a stock that had added more than 150% through the first 6 weeks or so of the year, only to give it all back as some of the AI trade cooled.

Looking at the fundamentals, and BigBear.ai reported a revenue of $43.8 million for the fourth quarter, marking an 8% increase compared to the previous year. However, this came in light of the street's expectation for $54.61 million. The company's adjusted EPS loss came in at $0.43 per share, wider than the anticipated $0.05 loss per share and an increase from the previous year's loss of $0.14 per share.

Despite these setbacks, the company showed improvement in its gross margin, which increased to 37.4% from the previous year's 32.1%. BigBear.ai's ending backlog also grew 2.5 times to $418 million year-over-year, indicating potential future revenue.

CEO Kevin McAleenan called 2024 ” a pivotal year”, as he indicated the company has “demonstrated momentum through major contract wins, expanding our backlog and growing our pipeline, maturing our technology portfolio, and restructuring our debt to strengthen our financial position for the long term.”

The company attributes some of its financial losses to ongoing investments in research and development, which are essential for future growth. In its strategic outlook, BigBear.ai has expanded its presence into commercial markets, notably facial recognition technology for secure payments.

Outlook has once again proven to be part of the downfall in price action, as has been the case with many tech firms reporting this quarter. The company projected a revenue range of $160 million to $180 million for fiscal 2025, which fell short of the consensus expectations of $193.90 million.

Whilst spikes in volatility in BBAI has become the norm in recent years, the latest developments are not all bad. When zooming out, the past 6 months leading into earnings had shown almost a 200% gain in the stock, and momentum had clearly been building in advance of the latest operational hurdle.

Whether the bulls return, or when they do so, is not immediately clear, but for the time being at least, looking back at the 3 year chart on the weekly candles show this is not the first time the stock has seen an early year volatility spike.