Why BigBear.ai Stock Is Plummeting Today

BigBear.ai (NYSE: BBAI) stock is seeing big sell-offs in Wednesday's trading. The software company's share price was down 18% as of 12:30 p.m. ET. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) was down 0.3%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was down 0.5%.

BigBear.ai stock is getting hit hard in today's trading due to reports that President-elect Trump could take drastic steps to quickly implement his desired tariff policy. The company's share price is also losing ground due to bearish coverage on Palantir Technologies (NASDAQ: PLTR) stock.

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BigBear.ai stock stumbles on Trump tariff news

Before the market opened today, reports emerged that President-elect Trump could declare a national economic emergency once he enters office. By declaring a national emergency, Trump could utilize special powers granted to the president through the International Economic Emergency Powers Act that would allow him to rapidly implement wide-ranging tariffs on goods produced outside the country.

The market is reacting negatively to the news, and high-risk stocks with speculative outlooks are seeing particularly pronounced sell-offs. While BigBear.ai is valued at roughly 4.2 times this year's expected sales and may not appear to have a highly growth-dependent valuation, given its recent sales momentum, the company's path to profitability is uncertain -- and its share price is seeing a big pullback today.

BigBear.ai stock falls on Palantir coverage

As a player in the artificial intelligence (AI) space trying to win contracts with U.S. defense agencies and other public sector categories, BigBear.ai stock has sometimes been compared to Palantir. The two companies also have a partnership. Due to these connections, BigBear's share price sometimes sees significant moves in conjunction with trading for Palantir stock.

Before the market opened today, Deutsche Bank published new coverage on Palantir and reaffirmed its sell rating on the stock. The firm's lead analyst on the stock did increase his one-year price target on the stock from $35 per share to $26 per share, but the new target still suggests downside of roughly 46%, as of this writing. While the business performances of Palantir and BigBear.ai aren't closely connected, they do share some areas of overlap -- and it's reasonable to expect that market enthusiasm for the smaller software player could wane if investors start becoming more cautious about valuation multiples for Palantir.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.