Bigbear.ai rose 260% last Thursday in one of the biggest moves of the week.
But the story isn’t quite what it seems.
The main catalyst for the move is an apparent contract win with the U.S. Air Force worth $900 million dollars.
There was also some chatter online about the stock being a potential short squeeze given that 13% of the float was sold short ahead of the announcement.
But, the 900 million dollar award does not mean $900M in revenue is coming in.
It's what’s called an IDIQ contract which means indefinite delivery / indefinite quantity.
As Bigbear itself said, the company has simply been selected *to compete* for orders.
Some analysts are aware of this issue with Oppenheimer reiterating a price target below $1 and William Blair also believes the news is being misread.
The short squeeze thesis also looks overdone.
#stocks #investing #stockmarket #overlookedalpha #finance
But the story isn’t quite what it seems.
The main catalyst for the move is an apparent contract win with the U.S. Air Force worth $900 million dollars.
There was also some chatter online about the stock being a potential short squeeze given that 13% of the float was sold short ahead of the announcement.
But, the 900 million dollar award does not mean $900M in revenue is coming in.
It's what’s called an IDIQ contract which means indefinite delivery / indefinite quantity.
As Bigbear itself said, the company has simply been selected *to compete* for orders.
Some analysts are aware of this issue with Oppenheimer reiterating a price target below $1 and William Blair also believes the news is being misread.
The short squeeze thesis also looks overdone.
#stocks #investing #stockmarket #overlookedalpha #finance
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NewsTranscript
00:00 BigBear.ai rose 260% last Thursday in one of the biggest moves of the week, but the
00:06 story isn't quite what it seems. The main catalyst for the move is an apparent contract
00:11 win with the US Air Force worth $900 million. There was also some chatter online about the
00:17 stock being a potential short squeeze, but the $900 million award does not mean $900
00:23 million in revenue is coming in. It's what's called an IDIQ contract which means "indefinite
00:29 delivery, indefinite quantity". As BigBear itself said, the company has simply been selected
00:35 to compete for orders. Financials are not compelling either. The company has growing
00:40 losses, a decent chunk of long term debt and increasing share dilution. Overall, this AI
00:46 business is big on buzzwords, but unless you think BigBear can start to win new contracts,
00:51 we think it's best to avoid this stock entirely. But these are personal opinions, not financial
00:57 advice and we hold no position in this stock.