To The Moon

Post election, technology sector is still in the spotlight, with (1) artificial intelligence (AI) and (2) crypto stocks among the market's top gainers amid expectations for more favourable policies from the incoming administration.

One lesser-known company that has gained massive attention from investors this week is $BigBear.ai Holdings(BBAI)$.

It is a penny stock in the AI space with a market cap of around $716 million only.

Early this December month, BBAI stock surged by +28.6% in a single session after a positive mention in The Economic Times. (see below)

It has since scaled back in its price after the punting is over ?

The write-up drew comparisons between BBAI and the much larger $Palantir Technologies Inc.(PLTR)$ , that has seen its stock soar by +345% YTD.

The post questioned whether BBAI could follow a similar trajectory as PLTR, given its (a) focus on AI and (b) machine learning solutions for complex data analysis.

What’s more, BBAI & PLTR are partners, making the question worth considering, especially for investors seeking the next AI stock multi-bagger. (more of that later on)

Even though BBAI is not yet profitable, some recent developments make it an exciting player in the AI analytics field.

Question - What exactly does BBAI do ? How might it grow in the analytic space? Let’s find out !

Numbers Behind BBAI's Potentials

BBAI is gaining recognition in artificial intelligence by providing intelligent solutions in areas such as:

• Machine learning.

• Data analysis. and

• Cybersecurity.

The company is dedicated to using technology to assist organizations, particularly in the defense sector, in making better decisions.

Stock Performance YTD.

Looking at BBAI's stock over the past year, it seems to possess the potential to follow in the footsteps of Palantir: (see above)

• Over the past 52 weeks, stock price is up +100%. 

• Over the year, it is up +57.7%

The stock is volatile alright, with a beta of 3.58.

However, recent contracts & revenue growth suggest that BBAI might be on the verge of an inflection point.

Particularly if it keeps landing government contracts, and branch into commercial markets, similar to Palantir's trajectory.

Q3 2024 Earnings.

On growth, below is BBAI Q3 earnings:

• Revenue increased +22.1% YOY to $41.5 million compared to $34.0 million (Q3 2023).

• Loss per share was -$0.05 vs earnings per share of $0.03 (Q3 2023).

• Gross margin increased to 25.9% YoY, compared to 24.7% (Q3 2023).

• Net loss of $12.2 million and non-GAAP Adjusted EBITDA* of positive $0.9 million.

• Net lost was $12.2 million vs net profit of $4.0 million (Q3 2023). Loss was due to (a) smaller gains from changes in stock options (warrants) and (b) smaller gain from changes in the value of financial contracts (derivatives).

• Cash balance stood at $65.6 million (as of 30 Sep 2024).

Looking at BBAI’s earning/loss per share for the past 4 quarters, the conclusion to be drawn is the company is making effort to beat its forecast.

It succeeded for 4 of 5 quarters except for 02 May 2024 when actuals really fell short of forecasts.

Outlook - Q4 & FY 2024.

• Affirmed full-year 2024 revenue guidance between $165 and $180 million.

Catalysts.

While there are risks when investing in growth-stage penny stock, BBAI is an interesting investment opportunity, as it navigates the usual challenges faced by emerging tech companies.

So, what is/are driving this company that the press has labelled a “growth” stock ?

BBAI is making great strides, thanks in parts to (a) important contracts and (b) key partnerships.

(1) US Army’s Objective Environment Project - valued $165.15 million.

• In October 2024, BBAI was awarded a 5-year contract to develop the US Army’s Global Force Information Management system (GFIM-OE).

• This builds on BBAI's past work on the project, that have begun since 2021.

• BBAI will help the US Army update its old systems and move towards a more modern, data-driven approach application.

(2) US’s Federal Aviation Administration IT project - valued at $2.4 billion.

• In October 2024, BBAI together with Concept Solutions, announced that they have been awarded, a 10-year contract to enable the US Federal Aviation Administration (FAA) to acquire a full range of IT capabilities, solutions, and emerging technologies.

(3) BBAI and Palantir Partnership.

On 15 Nov 2024, BBAI and PLTR announced a commercial partnership to integrate their AI products to help businesses make better complex decisions.

As part of the integrated product offering:

• Palantir's Foundry platform will work with BBAI's (i) Observe, (ii) Orient, and (iii) Dominate (OOD) products.

• This will create a powerful system that gathers data from around the world, helps businesses understand it (Observe), figure out what to do (Orient), and even predict what might happen next (Dominate).

• This will be helpful for high-growth companies in government and commercial sectors eg. space, retail, logistics and energy.

This collaboration lets BBAI tap into Palantir's strong reputation and market presence, which could help it grow even faster.

(4) US Denver Airport Biometric Verification System Rollout.

In October 2024, Denver Airport (DIA) began using BBAI's facial recognition system (veriScan) to speed up boarding for international flights.

Key notes & facts:

• Optional for US citizens (show passport if preferred).

• Over 46,600 flyers use it weekly at airport’s 14 gates.

• It helps verify identities as required by US border control, while upholding passengers’ privacy.

Denver International airport is 1 of 15 US hub airports.

My Thots: With its successful implementation, the potentials for remaining 14 hub airports to adopt BBAI’s tried-and-tested solution is wide opened.

Analysts’ Ratings.

In its Q3 earnings release, BBAI iterated that FY 2024 revenue guidance of $165 to $180 million, remains status quo.

Orders’ backlog is roughly $437 million, although management has cautioned that it expects “lumpy” results.

This is because governments continue to proceed carefully with AI budgets.

BBAI - ytd performance and target prices

• BBAI’s year-to-date performance is show above.

• It peaked in March 2024 at $4.80 per share and was above S&P 500 index.

• By May 2024, its weak performance meant that it was trending below the S&P 500 index.

• From beginning of October 2024, it rose ‘sustainably’, with pullback along the way.

• On 02 Dec 2024, BBAI finally managed to stay above the S&P 500 index for the first time since 26 Mar 2024.

• Analysts has predicted a high of $3.50, a mean (average) of $3.00 and a low of $2.50.

• Fri, 13 Dec 2024’s closing was a mere $2.52, its low alright !

Analysts are positive about BBAI's future.

Four analysts in coverage have a consensus rating of "Strong buy." (see above 1st image)

Among these analysts, three suggest a “Strong buy,” while one has a “Hold” rating. (see above 2nd image)

The average price target for BBAI is set at $3.00, that is a discount to Friday’s $3.38. 

The “high” target of $3.50 is only 3.55% overhead.

My viewpoints : (mine only)

• BBAI is making name for itself in the AI landscape.

• Bolstered by (1) key contracts win and (2) a strategic partnership with PLTR, that will generate a lot of synergy for both government agencies and corporate America.

• Realistically, not unless it is the Mega Cap tech companies that have deep pockets and ‘unlimited’ resources to develop “new ways” of working leveraging artificial intelligence (AI).

• The pragmatic approach is to tap on “up and coming” IT forefront companies like PLTR (4 years old) and BBAI (3 years old) to help achieve the companies’ goals.

• What have these ‘smaller’ companies got to lose but everything to gain by harnessing hidden values off ‘precious’ data that they are sitting on.

• As BBAI is similar outfit to PLTR, its trajectory and path to growth will more or less be similar as well.

• Taking a leaf off PLTR, BBAI will need to (a) consistently report stellar earnings (revenue and EPS) quarter after quarter and (b) make in-roads and grow its commercial customer base.

• And perhaps get included in the Nasdaq board and finally making it to the Nasdaq-100 index.

• That should be when the fun begins.. right !

BBAI stands to benefit from its partnership with Palantir, most definitely ! Are you still waiting ? The early bird catches the worm, no ?

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

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• Do you think BigBear.ai is as full of potentials as the press made it out to be ?

• Do you think the partnership with PLTR will be a boon for BBAI ? I think so !

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