Why BigBear.ai Stock Is Sinking Today

Motley Fool
2024.12.19 17:28
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BigBear.ai's stock is down 4.8% amid macroeconomic concerns and aggressive selling by its largest shareholder, BBAI Ultimate Holdings. Despite an initial surge of 18.5% following a new government contract announcement, investors are shifting away from speculative stocks due to cautious Federal Reserve commentary on interest rates. BBAI Ultimate Holdings plans to sell over 2.8 million shares, contributing to the stock's decline. The contract awarded by the U.S. General Services Administration is for a suite of projects with a 10-year ordering period, but market sentiment remains bearish.

The stock of BigBear.ai (BBAI -6.87%) is losing ground in Thursday's trading. The company's share price was down 4.8% as of noon ET today, while the S&P 500 index was up 0.5%, and the Nasdaq Composite index was up 0.7%.

BigBear stock had been up as much as 18.5% to start the day's trading thanks to an announcement of a new government contract. But investors are weighing macroeconomic risks and pivoting away from speculative stocks, and recent filings with the Securities and Exchange Commission (SEC) didn't help, either.

BigBear.ai is getting caught up in the market's pivot

BigBear.ai published a press release before the market opened today announcing that it had been awarded a contract through the U.S. General Services Administration (GSA). The tech specialist will be providing services for a suite of projects across the government that are designed to streamline procurement services for civilian and defense projects.

The contract is designed to cover multiple projects, and it extends for a 10-year ordering period and has no maximum dollar amount. The news initially helped power a strong bullish surge for BigBear's share price, but investors are now pivoting in response to the Federal Reserve's recent interest rate news.

The Fed delivered the cut of 25 basis points that investors expected, but Jerome Powell issued cautious commentary on next year's outlook. Investors had been hoping for four cuts of 25 basis points next year, but it now looks like only two cuts may be made.

Tech stocks are broadly up today, but investors are shifting out of riskier speculative plays and putting their money behind big-name companies that are seen to be safer. BigBear.ai stock is falling in response, and there's likely another catalyst factoring into the sell-off.

Aggressive institutional selling continues for BigBear.ai stock

With a filing submitted to the SEC yesterday, BBAI Ultimate Holdings showed that it planned to sell more BigBear.ai stock. BBAI Ultimate Holdings is a division within AE Industrial Partners, an investment firm that is BigBear.ai's largest shareholder.

BBAI Ultimate Holdings is required to submit filings to the SEC when it buys and sells shares because it owns more than 10% of the company's stock. The holding company has been aggressively selling stock lately.

BBAI said that it planned to sell 2,860,843 shares of company stock yesterday. While the company is still expected to own 250,585,897 shares after closing the proposed transaction, it's been selling a substantial amount of stock most trading days. Members of the company's management team and board of directors have also been selling shares.

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