BigBear.ai (BBAI) stock closed the day 5% lower after putting in an impressive 12% rally in the early trading session.
The company is a technology company that specializes in artificial intelligence (AI), machine learning (ML), and data analytics solutions. BigBear falls into the category of an AI Service company like Palantir (PLTR) , IBM (IBM) or Salesforce.com (CRM).
Shares have grabbed the attention of speculative traders over the last month following a flurry of headlines, including a headline from short selling research outfit “Iceberg Research”.
The company initiates its research outlook by claiming “BigBear.ai has been a poster child of the ChatGPT-driven AI hype that swept the markets at the start of 2023.”
As with many short seller report, “IceBerg” discloses that they “may have a short position in the securities (and/or options, swaps, and other derivatives related to the stock) covered herein, and therefore may stand to realize gains in the event that the price of the covered securities declines.”
The short seller released a report claiming that BigBear.ai’s rally has been nothing more than the result of a company that has done well to associate itself with the AI industry via its corporate name.
“Iceberg” goes on to claim that BigBear.ai financials reflect “low growth and escalating losses” along with their expectations that one of the company’s private equity partners is selling their position in BigBear.ai.
BigBear.ai is prone to short squeeze rallies as the stock has a current short interest ratio of 37.7. Short positions currently account for 10% of the company’s “float” or shares available to trade in the market.
On the positive side, BigBear.ai released earnings results in November that were better than analyst expectations.
The company’s recent earnings beat its target by $0.02 for the second quarter in a row though the company’s 22% growth in revenue was still lighter than expected.
Analysts have started to take some interest in BBAI shares as the company has flashed signs of coming business.
This morning, the company announced a collaboration with Proof Labs Inc to deliver an advanced cyber resiliency solution for the Department of the Air Force.
From a technical perspective, BigBear.ai is trading in a healthy trend.
The stock’s 50-day moving average is in a bullish pattern and recently crossed above the longer 20-day trendline to form a bullish Golden Cross pattern.
Shares may face selling pressure to their 20-day moving average in the $2.50 price zone.
For now, the bulls maintain control over this short seller’s pick with a price target of $5.00.
