BigBear.ai (BBAI 2.58%), a developer of AI modules for edge networks, has been a volatile investment over the past three and a half years. It went public by merging with a special purpose acquisition company (SPAC) on Dec. 7, 2021. Its stock opened at $9.84 on the first day and eventually closed at a record high of $12.69 on April 13, 2022. But by Dec. 29, 2022, it had sunk to its lowest post-merger closing price of $0.63 per share.
Like many other SPAC-backed start-ups, BigBear.ai overpromised and underdelivered. Prior to its merger, it claimed it could triple its revenue from $182 million in 2021 to $550 million in 2024. But in reality, its revenue grew from just $146 million in 2021 to $158 million in 2024.
Image source: Getty Images.
However, BigBear.ai's stock now trades at about $6.30 per share -- so a $1,000 investment at its post-merger low would be worth around $10,000 today. Let's see why this little AI stock bounced back, and whether or not it's still worth buying.
What happened to BigBear.ai after its market debut?
BigBear.ai develops three AI modules (Observe, Orient, and Dominate) that ingest data, identify trends, and predict future outcomes. Its modules can be plugged into edge networks, which intercept and process data faster than origin servers. It shares that data with bigger analytics companies like Palantir Technologies.
That business model sounded promising, but BigBear.ai's growth stalled out as it struggled with tough macro headwinds, intense competition, and the bankruptcy of its top customer, Virgin Orbit. Its CEO, Reggie Brothers, who took the helm in 2020, stepped down in late 2022.
Brothers' successor, Mandy Long, abandoned the company's original pre-merger forecasts, cut costs to stabilize its cash flow, and orchestrated its all-stock takeover of the AI vision firm Pangiam to expand its ecosystem and boost its revenue. This January, Pangiam's co-founder and CEO, Kevin McAleenan, succeeded Long as BigBear.ai's new CEO.
Why did the bulls rush back to BigBear.ai?
In 2024, BigBear.ai's revenue rose, its gross margin expanded, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved. Those improvements can be attributed to Long's cost-cutting efforts and its inclusion of Pangiam's higher-margin revenue.
|
Metric |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|
|
Revenue |
$145.6 million |
$155.0 million |
$155.2 million |
$158.2 million |
|
Gross Margin |
23% |
27.7% |
26.2% |
28.6% |
|
Adjusted EBITDA |
$4.9 million |
($17.1 million) |
($3.2 million) |
($2.4 million) |
Data source: BigBear.ai.
In the first quarter of 2025, BigBear.ai's revenue rose 5% year over year to $34.8 million, and its gross margin rose 20 basis points to 21.3%. But its adjusted EBITDA declined from negative $1.6 million to negative $7 million as it integrated Pangiam, ramped up its R&D spending, and dealt with the delayed funding of its government contracts.
For the full year, BigBear.ai expects its revenue to rise 1%-14% to $160 million-$180 million with an adjusted EBITDA in the "negative single digit millions." That matches analysts' expectations for $168 million in revenue (6% growth) and a negative adjusted EBITDA of $7 million.
With an enterprise value of $1.98 billion, it doesn't seem like a bargain at 12 times this year's sales. However, it impressed the bulls with the size of its backlog, which grew 30% year over year to $385 million in the first quarter of 2025 as it secured more government contracts. Those contracts include new digital ID and biometrics initiatives for the DHS, a modernization project for the U.S. military's Orion Decision Support Platform (DSP), and new supply chain projects.
So as long as BigBear.ai can fulfill its existing orders and keep attracting more government and commercial clients, it should continue expanding. In 2026, analysts expect its revenue to rise 12% as its adjusted EBITDA turns positive for the full year.
But is it the right time to buy BigBear.ai?
BigBear.ai's growing backlog, the increased usage of its biometrics tools, and its expanding gross margins all suggest its business is stabilizing. Yet it's also more than doubled its number of shares since its market debut with its secondary offerings, its takeover of Pangiam, and its stock-based compensation -- and that dilution should persist for the foreseeable future. Its insiders also sold nearly 30 times as many shares as they bought over the past 12 months. That chilly insider sentiment could limit its upside potential.
A few green shoots are certainly appearing for BigBear.ai, but I don't think it will break out of its niche anytime soon. Its stock might be driven higher by the near-term news about the usage of its biometrics at airports and other ports of entry, but it's still not a compelling long-term buy.
