Growth Stocks (BBAI, ACHR, ASTS) React To Missed Earnings – The Importance Of Guidance

Last night's earnings prints have once again underscored the inherent volatility in early-stage growth stocks, as BigBear.ai Holdings Inc. (BBAI), AST SpaceMobile Inc. (ASTS), and Archer Aviation Inc. (ACHR) experienced markedly different stock price reactions following their latest set of financials.

This divergence highlights the sensitivity of markets to guidance, promising technological advancements, and the overall risk profile associated with innovative companies.

Whilst each of the names missed EPS estimates, one stock has moved substantially higher with reaffirmed guidance, as the the others pull back sharply to differing degrees. Let's take a closer look at what came out in the wash.

BigBear.ai Holdings Inc. (BBAI)

BigBear.ai's stock has fared the worst, facing a significant market correction after announcing a loss of $0.71 per share, substantially missing the $0.06 loss expected. Revenue also missed the street's expectations by a long way at $32.47 million, below the consensus estimate of $40.6million, and a decline from $39.78 million in the same quarter of the previous year.

Perhaps worse was the guide for $125-$140million in revenue for FY25, which was a big disappointment when compared to the consensus of $167.74million.

This revenue shortfall, and lower guide triggered a sharp sell-off, with BBAI's stock price plummeting over 29% in after-hours trading to $5.01, steadying marginally this morning, down 27.4%. The negative reaction reflects investor concerns about the company's ability to convert its backlog into revenue and navigate slower federal spending, a key driver of its business.

To fully gauge the shift in sentiment, it's worth considering that before the pullback, BigBear.ai's stock had previously experienced substantial gains, with a year-to-date increase of 72% leading in, and a staggering 425% increase year-over-year. Plenty will have to improve in order to rebuild sentiment in operations and execution moving forward.

AST SpaceMobile Inc. (ASTS)

AST SpaceMobile, in contrast, enjoyed a positive market response, with its stock price rising by 13%. The company is focused on deploying a space-based cellular broadband network and announced ambitious plans to launch over 60 satellites in 2025 and 2026. The messaging was positive regarding the outlook, and the sentiment has followed through in price action.

These satellites aim to provide continuous coverage in key markets, including the United States, Europe, and Japan. Furthermore, AST SpaceMobile reported a strong financial position, ending with significant cash reserves, boosted by previous offerings. This financial strength and the company's progress in its deployment plans have instilled confidence among investors, driving the stock price higher even in spite of a miss on EPS and revenue.

EPS losses for the period of 41cents were considerably worse than the 8c loss expected, although with the company in revenue infancy ($1.16million Vs $6.02million expected), the guide has played a more pivotal role in the reaction. The company reaffirmed the $50-$70million revenue figure for H2 from commercial and government customers, proving again that the outlook can outweigh current execution.

Archer Aviation Inc. (ACHR)

Archer Aviation, an electric vertical takeoff and landing (eVTOL) aircraft developer, also presented a mixed picture to the market. The company is actively pursuing the commercialization of its “Midnight” eVTOL aircraft and highlighted a robust liquidity position with $1.7 billion in cash at the end of Q1 2025.

Archer plans to launch its aircraft in the UAE later this year and reported progress in its piloted flight test program. Despite these positive developments, Archer's stock price is down 6.7% this morning, with the company missing on EPS, with losses per share widening from $0.32 last year, to $0.36 this time around. This was also a miss on the street's expectations for a $0.25 EPS loss.

This suggests that while the company's technological advancements are promising, investors remain cautious about the inherent risks and regulatory hurdles associated with bringing new aviation technologies to market, as well as the path to profitability. The long development timeline, guiding to the LA 2028 Olympics for a major milestone, and capital-intensive nature of the eVTOL industry also contribute to investor uncertainty.