Why Is BigBear.ai Holdings Stock Plummeting This Week?

Shares of BigBear.ai Holdings (NYSE: BBAI) are falling this week, down 21.2% as of 12:38 p.m. ET on Friday. The move comes as the S&P 500 and the Nasdaq-100 lost 2.7% and 4.5%, respectively.

The artificial intelligence (AI) company is seeing its stock fall amid troubling economic data and growing concern over stretched valuations for AI stocks.

Job cuts and falling consumer sentiment

As the government shutdown drags on, investors will still have to wait for official job numbers from the Bureau of Labor Statistics (BLS), but a report from the private firm Challenger, Gray & Christmas showed October job cuts totaled 153,074, the most on record for October since 2003.

At the same time, the University of Michigan Index of Consumer Sentiment hit a three-year low not seen since inflation was at a 40-year high in the wake of the pandemic and only slightly above its worst reading ever.

Image source: Getty Images.

These troubling signs are a major concern in any market, but with many AI stocks trading with extreme multiples, investors are looking for safety. BigBear.ai's negative earnings and price-to-sales ratio (P/S) of more than 13 are not exactly reassuring.

BigBear.ai's stock is pricey

BigBear.ai's nearly $2.5 billion market capitalization is too rich for a company that has lost nearly $450 million in the last 12 months. Especially given that it is growing the wrong way, with sales down 18.4% year over year last quarter.

Johnny Rice 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.