Investing.com -- Shares of BigBear.ai Holdings (NYSE:BBAI) fell sharply by 13.4% today following the company’s announcement that it needs more time to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The delay is due to a reevaluation of the accounting treatment of the company’s convertible notes.
In a recent SEC filing, BigBear.ai disclosed that in preparing its financial statements for the 2024 Form 10-K, the company and its independent auditors, Grant Thornton LLP, reassessed the accounting presentation of the convertible notes due in 2026, specifically the embedded conversion option. This reevaluation contradicts the previous conclusion that the embedded conversion option did not need to be accounted for separately as a derivative from the 2026 Notes.
As a result of this change in position on the interpretation and application of accounting guidance, BigBear.ai will also have to restate its audited financial statements for the fiscal years ended December 31, 2022, and 2023, as well as the interim unaudited consolidated financial statements for each quarterly period in 2023 and 2024. The company is currently completing valuations necessary to determine the impact on its historical financial statements and to disclose the impact as of and for the fiscal year ended December 31, 2024.
This news has clearly rattled investors, leading to a significant drop in the company’s stock price. The restatement of financial results often raises concerns about a company’s accounting practices and can lead to uncertainty regarding past and future financial health.
The delay in filing and the need for restatement come at a time when investors are already navigating a complex market environment, and such uncertainties can further dampen investor sentiment. BigBear.ai’s stock movement today reflects the market’s reaction to the unexpected announcement and the potential implications it may have on the company’s financial reporting credibility.
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