What Happened?
Shares of government consulting firm Booz Allen Hamilton (NYSE: BAH) fell 9.2% in the afternoon session after the U.S. Department of the Treasury announced it canceled all contracts with the consulting firm.
The decision followed a major data breach by a former Booz Allen employee, Charles Littlejohn, who between 2018 and 2020 stole and leaked confidential tax information for hundreds of thousands of taxpayers. The Treasury terminated 31 separate contracts with the company, which amounted to $4.8 million in yearly spending and $21 million in total obligations. In a statement, the Treasury Secretary noted that the firm "failed to implement adequate safeguards to protect sensitive data." The department stated the breach affected approximately 406,000 taxpayers.
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What Is The Market Telling Us
Booz Allen Hamilton’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 2.9% on the news that President Donald Trump called for a significant increase in U.S. military spending, which lifted the entire defense sector.
The proposal aimed to raise the U.S. military budget to $1.5 trillion by 2027, representing a substantial increase from the existing $901 billion. This news prompted a broad rally across the defense industry, with major contractors like Lockheed Martin and Northrop Grumman also experiencing significant gains. The move marked a sharp reversal from the previous day, when stocks in the sector fell after Trump criticized contractors for slow production and threatened to block their dividends and stock buybacks. Investors appeared to set aside those earlier concerns, focusing instead on the potential for a large boost in government spending.
Booz Allen Hamilton is up 11% since the beginning of the year, but at $94.22 per share, it is still trading 30.4% below its 52-week high of $135.38 from January 2025. Investors who bought $1,000 worth of Booz Allen Hamilton’s shares 5 years ago would now be looking at an investment worth $963.01.
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