BigBear.ai (NYSE: BBAI), an AI-driven security firm, saw its shares climb 18% in the two weeks following its late-July earnings report, initially delighting investors.
That momentum quickly evaporated. The stock has since fallen 11.8%, dropping below the $3-per-share mark on Tuesday, with additional downside possible.
With the share price now under $3, investors are asking whether a reverse split looms. Here is what you should know.
The earnings report revealed significant weaknesses
Investors initially cheered the July 30 Q2 results, which contained bright spots but also left major concerns unaddressed.
Revenue reached $36.7 million, up 13% year-over-year, while gross margins expanded from 25% to 32.8%. The company is generating more profit and converting a larger share of revenue to the bottom line.
Net losses also narrowed sharply, falling from $228.6 million a year earlier to $25.7 million in the quarter.
CEO Kevin McAleenan reiterated full-year revenue guidance and pointed to more than 20 new contracts as a reason for confidence.
However, the company burned $68.6 million in cash during the quarter, its share count continues to grow, and despite year-over-year gains versus 2025, both Q2 and trailing twelve-month revenue remain below 2024, 2023, and 2022 levels.
Despite these headwinds, a reverse split appears unlikely. Here is why.
Why a reverse split is unlikely
Although the stock trades below $3, the NYSE listing threshold is just $1 per share, and BigBear.ai remains comfortably above that floor.
The stock has dipped below $3 twice in 2025 without triggering a reverse split: it fell to $2.59 in July before recovering, and dropped to $2.39 in April before rebounding to $9.78 later that year. Management may be banking on a similar recovery.
Management typically avoids reverse splits, as they are often associated with distressed companies. Announcing one could signal fear of falling below the $1 threshold, potentially sparking a sell-off from nervous investors.
Barring a drop below $2, a reverse split seems unlikely. Nonetheless, shareholders should monitor the stock closely, as its volatility means a single canceled contract or negative headline could have an outsized impact.