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Bigbear recently expressed confidence in winning a naval contract earlier this week.
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This announcement helped boost BigBear’s stock to its highest point in several months.
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That said, the real issue lies in the company’s revenue growth, which is what investors should be paying attention to, rather than just the publicity.
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As of 1:55 PM ET, the stocks had dropped by 7.1%.
Bigbear.ai is recognized for providing AI solutions and services that are mission-ready, mainly for defense and national security. They utilize predictive analytics to assist users in navigating complex datasets. For instance, Bigbear played a role in the Navy’s ongoing UNITAS 2025 maritime exercises, employing AI for coordination, decision making, and threat detection, which is crucial in areas dealing with issues like drug control and trafficking.
The news has certainly brought Bigbear its highest stock price since mid-July, but while that’s a positive spin, the company’s release didn’t clarify potential revenue gains from this involvement.
This could pose a challenge for Bigbear, as it hasn’t met expectations as a growth stock. Over the last five years, their revenue has only risen by 1% each year, all while navigating increasing losses and dwindling cash reserves.
On a brighter note for investors, with a cash reserve of $390 million and a comparatively low debt of $133 million, BigBear can continue to burn through cash for over a decade at its current pace (which is below $28 million annually).
However, it’s worth noting that many analysts foresee an acceleration in Bigbear’s cash burn rather than stabilization, with projections suggesting it could nearly double in the next two years. If this trend continues, it might be wise to view BigBear stocks with caution.
So, before considering investment in bigbear.ai, it’s definitely something to ponder.
The Motley Fool Stock Advisor team has spotlighted what they consider the 10 best stocks to invest in now, and interestingly, bigbear.ai didn’t make the list. The chosen stocks could offer significant returns over the coming years.
