Why BigBear.ai Stock Plummeted 20.2% Last Month and Has Kept Falling in September

Key Points

• BigBear.ai stock sank last month after the company published a disappointing Q2 report.

• BigBear.ai's sales and earnings fell short of Wall Street's targets in Q2, and the company issued a big downward revision for this year's sales target.

• The company's latest performance update raises questions about its growth opportunities in the defense AI space.

• 10 stocks we like better than BigBear.ai ›

BigBear.ai (NYSE: BBAI) stock got crushed in August's trading. The company's share price fell 20.2% across the stretch, according to data from S&P Global Market Intelligence.

BigBear.ai saw a big valuation pullback in response to the publication of the company's second-quarter results last month. Sales and earnings for the period came in below Wall Street's expectations, and the company also issued disappointing forward guidance.

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BigBear.ai stock plummeted on weak Q2 results and guidance

BigBear.ai published its Q2 results on Aug. 11 and reported sales and earnings for the period that fell short of the market's expectations. The company reported a loss per share of $0.71 on revenue of $32.5 million in the period. The average analyst estimate had called for a per-share loss of $0.06 on revenue of roughly $40.6 million. While analysts and the company's own guidance had targeted revenue growth in the period, sales were actually down roughly 18.3% year over year in the period.

Making matters much worse, BigBear.ai lowered its full-year performance guidance. Management now expects full-year sales to come in between $125 million and $140 million. Previously, it had targeted sales between $160 million and $180 million. The company pointed to delayed contracts from the U.S. government as a key factor in its lowered sales target. The midpoint of the new sales guidance range suggests an annual revenue decline of roughly 16%.

What's next for BigBear.ai?

After its big sell-off last month, BigBear.ai has fallen an additional 2% across September's trading. Despite huge volatility across 2025, BigBear.ai stock is still up 12% across the year's trading. The stock had previously seen big gains as investors placed growth bets on companies operating at the intersection of artificial intelligence (AI) and defense technologies, but the company's Q2 report has raised questions about whether the stock is actually a strong play in the defense AI space.

Prior to BigBear.ai's Q2 report, the company's midpoint guidance had called for annual revenue growth of roughly 7.5% this year. With the company now guiding for a double-digit sales decline, the demand for its product offerings to the U.S. Army and other government customers is looking significantly weaker.

While government defense contracts can be subject to cyclicality and delays, BigBear.ai's latest guidance update suggests that the company's technological positioning may not be as strong as many investors had hoped. Even though BigBear.ai has seen much weaker uptake than expected from government customers, other players in the defense AI space such as Palantir have crushed expectations when it comes to landing new public-sector contracts.

In addition to its weak Q2 results and guidance last month, BigBear.ai also submitted a filing to the Securities and Exchange Commission announcing that it was laying the groundwork for potential new stock sales. According to the filing, BigBear.ai was looking at selling roughly 65 million new shares of common stock.

Between the big downward revision for this year's revenue target and new stock sales in order to raise funds, BigBear.ai stock looks like a risky play right now. While it's possible that the company could score significant AI-related defense contract wins, recent updates suggest that its position in the space may be weakening.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.