How Secure Should You Be With BlackBerry Stock?

BlackBerry stock got caught up in the meme stock shenanigans and soared to a 10-year high. BB stock has come back to earth, and on the heels of a weak earnings report and with meaningful revenue from its recent contracts awhile away, it’s fair to wonder if BlackBerry has further to fall.
How Secure Should You Be With BlackBerry Stock?
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BlackBerry (NYSE:BB) is a company that is still best known to most investors for its iconic pagers and smartphones. But BlackBerry has always been, first and foremost, a software company. And after becoming a stock that’s largely been left for dead by investors, BB stock is beginning to make a resurgence in the area of cybersecurity and tracking.

However, that doesn’t explain the spike in Blackberry’s stock price in 2021. For that, we have the Reddit investors to thank. BB stock got caught up in the meme stock shenanigans and soared to a 10-year high. That’s not a misprint. The last time, BlackBerry stock was trading for over $25 bucks a share, many “BlackBerry-addicts” were reluctantly turning in their devices for an iPhone.

The stock has come back to earth, but after a poor earnings report it’s fair to wonder if BB stock has further to fall.

How Concerned Should You Be About Earnings?

There’s no question that investors were unimpressed with BlackBerry’s fourth-quarter results. Adjusted earnings per share (EPS) of 3 cents met analysts’ expectations. However, that was down from the adjusted EPS of 9 cents from the same period in the prior year.

A similar story played out in revenue which, at $210 million, was well down from the $282 million from the same period in 2019. In this case, the company also missed analysts’ forecast of approximately $245 million.

However, BlackBerry said the decline in revenue was explained by a reduction in licensing fees as the company is in the middle of negotiations to sell off some of the company’s patents related to its legacy wireless networking and mobile devices.

BlackBerry Wants to Connect With … Your Car

Unlike its mobile devices of years gone by, BlackBerry is competing in the connected vehicle arena. However rather than offering a piece of hardware, Blackberry is providing a scalable, cloud-connected software platform called BlackBerry IVY (Intelligent Vehicle Data Platform).

According to the company, “BlackBerry IVY…will allow automakers to provide a consistent and secure way to read vehicle sensor data, normalize it, and create actionable insights from that data both locally in the vehicle and in the cloud.”

Why is this significant? Right now, there is no established Application Program Interface (API) that app developers can use across all brands of connected vehicles. Different manufacturers have different architectures with different sensors and ways of reading those sensors.

That’s the specific challenge that IVY attempts to address. And Blackberry has signed a contract with Amazon (NASDAQ:AMZN). This will allow BlackBerry to partner with Amazon Web Services (AWS) to make this connected vehicle future a reality.

However in the short term, BlackBerry is being caught up in the chip shortage that is affecting multiple companies.

Teaming Up to Enhance Cybersecurity

As I mentioned above, BlackBerry is pivoting into the cybersecurity arena. This makes sense since cybersecurity stocks have been surging to meet the demands of remote work. BlackBerry is a well-known name in this sector. In fact, if you think about the old BlackBerry devices, they were known for their safety and security.

And here as well BlackBerry has lined up a key partner in Microsoft (NASDAQ:MSFT).  BlackBerry will help support the Microsoft Teams platform.

What investors are waiting on, of course, is revenue. And that is not likely to happen right away.

BlackBerry May Have Further to Fall

As I write this, BB stock is down over 8% in early trading the day after the earnings report. It has however, bounced off its lows.

BlackBerry is rated by 9 analysts who give the stock a consensus hold and a price target of $6.63. That’s a drop of over 20% from its current level.  What should be more concerning however is that the stock has 2 sell ratings and no buy ratings.

On the other hand, institutional ownership in BB stock is a healthy 46%. That should limit the downside pressure a little. If the stock can hold the$8.50 level investors may have a nice level of support.

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