Parsons Stock Plunges 21% After FAA Awards Air Traffic Control Contract to Peraton – What’s Next for the Aerospace Giant?

Summary
• Parsons (PSN) shares fell 21.3% intraday, trading at $66.89 as of 18:40 ET on December 5, 2025.
• The stock opened at $67.00 but hit a low of $62.33, erasing nearly $18 billion in market value.
• The FAA awarded a $12.5 billion air traffic control modernization contract to Peraton, dashing investor hopes for a Parsons win.
• Analysts at Raymond James downgraded PSN to Market Perform, citing diminished growth expectations.

Parsons’ sharp selloff reflects the immediate fallout from losing a pivotal government contract. The stock’s intraday range—from $62.33 to $68.75—underscores the volatility as traders reassess the company’s near-term prospects. With the aerospace sector bracing for ripple effects from this decision, the focus now shifts to how PSN navigates its remaining growth drivers.

FAA Contract Loss Sparks Sharp Selloff in Parsons Shares
The Federal Aviation Administration’s (FAA) decision to award the Brand New Air Traffic Control System (BNATCS) contract to Peraton instead of Parsons triggered an immediate and severe sell-off. This $12.5 billion contract had been a key catalyst for investor optimism, with Parsons positioned as the prime contractor in a joint bid with IBM. The loss not only removes a significant revenue stream but also eliminates a major growth driver for 2026/2027. Raymond James analyst Brian Gesuale highlighted that PSN’s stock had traded at a 35% premium to peers, largely due to expectations of this contract. The award to Peraton has now forced a valuation reset, with the analyst predicting the premium could halve. Additionally, the news dented investor confidence, as PSN’s shares had already traded at 28.8x forward earnings, a level unsustainable without the contract’s upside.

Aerospace & Defense Sector Mixed as Lockheed Martin Holds Steady
While Parsons’ shares plummeted, the broader aerospace and defense sector showed resilience. Sector leader Lockheed Martin (LMT) edged up 0.06%, reflecting stability in defense budgets and long-term contracts. This divergence highlights PSN’s over-reliance on high-impact, short-term government awards. Unlike LMT’s diversified portfolio, PSN’s exposure to single-contract outcomes leaves it vulnerable to sudden shifts in procurement decisions. The sector’s mixed performance underscores the importance of diversified revenue streams in defense contracting.

Options and Technicals: Navigating the Post-FAA Selloff
• MACD: 0.028 (bullish divergence), Signal Line: -0.007 (bearish), RSI: 47.2 (neutral), Bollinger Bands: Lower band at $80.52 (price at $66.89).
• 200-day MA: $72.87 (price below), 30-day MA: $83.39 (price far below).

Parsons’ technicals suggest a bearish near-term outlook, with the stock trading well below key moving averages and RSI hovering near neutral. The Bollinger Bands indicate oversold conditions, but momentum indicators like MACD and RSI lack conviction for a rebound. Traders should monitor the $62.33 intraday low as a critical support level. A break below this could trigger further selling, while a rebound above $68.75 may test the 52-week low of $54.56.

Top Options Picks:
• PSN20251219P65 (Put):
- Strike: $65, Expiration: Dec 19, IV: 59.7%, Leverage: 26.5%, Delta: -0.40, Theta: -0.023, Gamma: 0.048, Turnover: 79,446.
- IV (high volatility), Leverage (moderate), Delta (moderate bearish exposure), Gamma (high sensitivity to price swings).
- This put option offers strong leverage for a 5% downside scenario (projected price: $63.55). Payoff: max(0, $63.55 - $65) = $0. This contract is ideal for capitalizing on continued short-term weakness, with high gamma ensuring responsiveness to price swings.
• PSN20251219C65 (Call):
- Strike: $65, Expiration: Dec 19, IV: 58.0%, Leverage: 17.2%, Delta: 0.597, Theta: -0.199, Gamma: 0.0496, Turnover: 82,248.
- IV (high volatility), Leverage (moderate), Delta (moderate bullish exposure), Gamma (high sensitivity).
- This call option is a high-gamma, high-IV play for a potential rebound. A 5% upside (projected price: $70.23) yields a payoff of max(0, $70.23 - $65) = $5.23. Traders bullish on a short-term bounce should prioritize this contract, given its high gamma and liquidity.

Action Insight: Aggressive bears may consider PSN20251219P65 into a breakdown below $62.33, while bulls should target PSN20251219C65 on a rebound above $68.75.

Backtest Parsons Stock Performance
Below is the interactive event-study dashboard. Key metrics and curves can be explored directly in the panel.Highlights & interpretation 1. Sample size: 20 qualifying plunge days since 2022. 2. Short-term reaction: average returns stay mildly positive for the first week (≈ +1.2 % at day 8) with a win-rate up to 85 %. 3. Medium-term drift: after ~2 weeks the effect reverses. By day 17 cumulative performance turns significantly negative and keeps deteriorating to −5 % at day 30, while the benchmark rises ≈ +3.7 %. 4. Statistical significance: the negative divergence from day 17 onward is flagged as significant in the engine’s t-tests. 5. Practical takeaway: PSN tends to stage a brief bounce after a ≥ 21 % intraday collapse, but the edge disappears quickly and turns into persistent under-performance within a month.Parameter notes (auto-filled) • Backtest window: 30 trading days – default horizon for the event engine, suitable for short/medium-term drift analysis. • Price type: close price, because it aligns with post-event holding returns most traders measure. • End date: 2025-12-05 (today) to include the latest data available.Feel free to drill down in the dashboard for individual-day curves, confidence intervals, and per-event breakdowns.

Parsons at a Crossroads: Short-Term Pain, Long-Term Potential?
Parsons’ 21% selloff reflects the immediate pain of losing the FAA contract, but the stock’s long-term fundamentals remain intact. The company’s recent win on the DTRA CTRIC IV contract ($3.5 billion ceiling) and exposure to missile defense and Middle East infrastructure projects offer medium-term upside. However, near-term volatility is likely as the market digests the Peraton win. Traders should watch the $62.33 support level and the 52-week low of $54.56. Meanwhile, sector leader Lockheed Martin (LMT) remains a relative safe haven, up 0.06% today. For PSN, the path forward hinges on execution in its remaining growth areas and a potential rebound in investor sentiment. Watch for $62.33 breakdown or a catalyst-driven rebound above $68.75.