Stock-Split Watch: Is BigBear.ai Next?

Key Points

• Data analytics company BigBear.ai has skyrocketed over the past year.

• However, a stock split is doubtful due to its share price.

• Future growth could be hard to come by due to poor revenue numbers and gross profit margin.

• 10 stocks we like better than BigBear.ai ›

BigBear.ai (NYSE: BBAI) has become popular among investors looking for artificial intelligence (AI) stocks with high growth potential. With a $2.5 billion market cap (as of Sept. 19), this AI data analytics company is still on the smaller side, comparatively speaking. And while it's volatile, it has done very well over the last year, with returns of 334%.

When companies grow rapidly, they sometimes carry out stock splits to keep their share prices from getting too high. This can be an exciting time for investors. Companies have an average 12-month return of 25.4% after announcing a stock split, much higher than the S&P 500 index and its average annual return of 11.9%.

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The growth is there for BigBear.ai, so is a stock split on the horizon? It has never done one before -- let's see whether that's likely to change in the near future.

Image source: Getty Images.

A forward stock split is highly unlikely

The most common type of stock split is a forward split, where a company increases its number of shares and lowers its share price. Imagine you own 10 shares in a company that's trading at $300, and it conducts a 3-for-1 stock split. Your 10 shares would become 30, and the share price would go from $300 to $100.

As you can see, the actual value of your position (and the company) doesn't change after a stock split. All that changes is the share price and the number of shares.

Forward stock splits usually happen when a stock has been rising and is getting into a price range that could scare off prospective investors. If a stock costs $1,000 per share, that can prevent some people from investing, especially those on a budget.

BigBear.ai won't have that problem anytime soon. Even after its recent success, it currently trades at under $10, and the all-time high was $12.69. There's really no reason for BigBear.ai to carry out a forward split, but that isn't the only way a company can split its stock.

A heavy drop in value could lead to a reverse stock split

In a reverse stock split, a company decreases its number of shares and increases its share price. While forward splits are often good news for investors, the same usually isn't true with reverse splits. Often, it's because a company's low share price puts it in danger of being delisted.

BigBear.ai trades on the New York Stock Exchange (NYSE), and maintaining a share price of at least $1 is a continued listing requirement there. Companies are out of compliance if their share price is below $1 over a consecutive 30-day trading period.

There was a time when BigBear.ai was in the danger zone. It dropped to an all-time low of $0.63 in December 2022, and it spent much of last year below $2. But barring a total collapse, a reverse split probably isn't in the cards for BigBear.ai.

BigBear.ai has posted lackluster results so far

BigBear.ai looks like an exciting investment at first glance. It uses AI to analyze data, and it mainly markets to government businesses, where it develops custom solutions to fit their needs. If you squint, you can see a resemblance to Palantir Technologies, which has gained a staggering 2,220% over the last three years.

Except Palantir reported year-over-year revenue growth of 48% to $1 billion in Q2 2025, while BigBear.ai saw its revenue decrease 18% year over year to $32.5 million. Palantir's margins are also much, much better. Its gross profit margin was 81% for its most recent quarter. BigBear.ai's was 25%.

The odds of BigBear.ai announcing a forward or reverse stock split are extremely low right now. Even if it was going to do so, that wouldn't fix its issues. While other AI companies have seen their revenue soar, BigBear.ai's earnings have decreased, and its low profit margins indicate operational inefficiencies. Until it can improve on those numbers, it's a risky bet.

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Lyle Daly 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.