Uh Oh! BigBear.ai's Stock Dropped Below $3. Does That Mean a Reverse Split Is Imminent?
Key Points
BigBear.ai's stock fell below $3/share on Tuesday.
It has to maintain a share price of above $1/share to maintain its NYSE listing.
A reverse split would up the stock price, but would have other negative effects for the company.
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When AI-enhanced security company BigBear.ai (NYSE: BBAI) reported earnings at the end of July, investors seemed pleased. Shares rose 18% over the next two weeks.
But unfortunately for BigBear.ai investors, it didn't last. Since then, the company's stock price has tumbled 11.8%. On Tuesday, they plunged below the $3/share milestone. Further declines could be coming.
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Is BigBear.ai's stock now in danger of having to perform a reverse split? Here's what investors should know.
Image source: Getty Images.
BigBear.ai's earnings weren't great
Enthusiastic investors eagerly bid up BigBear.ai's share price after the company's Q2 earnings report on July 30. That report featured some wins, but left a lot of issues unresolved.
Quarterly revenue of $36.7 million was up 13% year-over-year (YOY), and gross margins also improved from 25% to 32.8% on a YOY basis. That means BigBear.ai is not only making more money, but sending more of the money it makes to the bottom line.
The company also managed to cut its net losses significantly, from $228.6 million in the prior-year quarter to just $25.7 million this year.
BigBear.ai CEO Kevin McAleenan also reaffirmed full-year revenue guidance and touted more than 20 new contracts as a basis for optimism.
The problem for the AI company is that it burned $68.6 million in cash during the quarter, its share count keeps increasing, and while Q2 and trailing twelve-month (TTM) revenue were up from 2025, both are still down from 2024, 2023, and 2022.
In spite of that, a reverse split seems unlikely. Here's why.
Image source: Getty Images.
Why BigBear.ai stock probably won't reverse split
Although the stock now trades for less than $3/share, the threshold for maintaining its listing on the New York Stock Exchange (NYSE) is just $1/share, and BigBear.ai shares are still well above that level.
BigBear.ai's share price has briefly dropped below $3/share twice since 2025 without a reverse split: in July, it hit $2.59/share before rebounding, and in April 2025, it dropped to $2.39/share before soaring to $9.78/share later that year. Management is likely hoping for another such turnaround.
Speaking of management, because reverse splits are often used by troubled companies to maintain their listing on an exchange, company leaders usually try to avoid them. If BigBear.ai announced a reverse split, it might signal that management was worried about shares dropping below the $1 threshold. That could quickly become a self-fulfilling prophecy as nervous investors fled the stock.
Unless BigBear.ai's share price drops below $2/share, investors probably don't have to worry about a reverse split. But this is still a stock that shareholders should keep an eye on. Its price is already volatile, and a single canceled contract or unfavorable news report could have an outsize impact.
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John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
