Since last Friday, shares of the artificial intelligence (AI) decision-making platform BigBear.ai (BBAI 5.42%) are down over 14%, as of 12:07 p.m. ET on Thursday. On Tuesday, the company submitted a filing to the U.S. Securities and Exchange Commission (SEC) that said it will need to restate certain past financial statements due to prior inaccuracies.
Higher losses than expected
BigBear.ai expects to restate its financials for the years ended 2022, 2023, and 2024. While not final, the company did provide preliminary expectations for the new numbers but warned that they are unaudited and could change.
NYSE: BBAI
Key Data Points
It expects to report a smaller loss before taxes in 2022 but then higher pretax losses in 2023 and 2024. Losses in 2024 are expected to jump from about $257 million to $296 million.
The main reasons for this are higher interest expense and a higher loss on the extinguishment of debt related to the company's 2026 convertible notes. Revenue, gross margin, and the company's operating losses for 2024 are not expected to change.
An accounting blunder at the wrong time
Management could very well have this accounting blunder under control, but it certainly came at the wrong time as investors are fleeing expensive artificial intelligence stocks. The shares have fallen 67% from highs seen on Feb. 13. The company is not yet profitable and had previously traded at a multibillion-dollar market cap, making it susceptible to pullbacks.
BigBear.ai certainly seems to have promise with its AI capabilities, but it's likely going to be volatile until it overcomes this hurdle and shows better progress toward profitability. I wouldn't buy anything more than a smaller, more speculative position.
