Overview of the Stock Decline#
Babcock & Wilcox Enterprises Inc (NYSE:BW) experienced a significant drop in its stock price, falling 9.6% on Thursday. This decline followed a report from a short seller that raised doubts about the company's recently announced $2.4 billion contract.
Concerns About the Contract#
The report specifically targeted the deal with Base Electron, suggesting that it may not come to fruition. One of the key points raised was that Base Electron shares the same Santa Monica address as Babcock & Wilcox's shareholder, B. Riley Financial. Notably, Bryant Riley is a director at Base Electron, which raises questions about the relationship between the two entities.
Questions About Company Relationships#
The short seller's report mentioned that Base Electron was established in December 2025, after Babcock & Wilcox had already announced a limited notice to proceed for a project in November. Additionally, there were conflicting statements regarding Base Electron's relationship with Applied Digital (NASDAQ:APLD). While Babcock & Wilcox referred to Base Electron as a "subsidiary," Applied Digital described it as an "independent" company in which it holds a 10% stake.
Implications for Future Projects#
The report also raised concerns about whether Applied Digital would utilize Babcock & Wilcox's services for its projects. Local meeting records indicated that Applied Digital plans to rely on grid power for its operations in Louisiana and South Dakota. Furthermore, the report noted that a guarantee from Applied Digital for Base Electron's obligations would be void if Base Electron secures $50 million in financing or goes public.
Earlier this month, Babcock & Wilcox announced it had received full notice to proceed on the $2.4 billion contract to deliver 1.2 gigawatts of new generation capacity, which includes four 300-megawatt natural gas-fired boilers and steam turbine generator systems aimed at powering Applied Digital AI Factory campuses.