3 Reasons Why BlackBerry May be Ready to Grow on Its Own Merits
One reason that some meme stocks have fizzled out is because their underlying business plan has fundamental flaws. But whether by good fortune of design, the retail investors who piled...
The unlikely meme stock is showing investors its business strategy is starting to pay off
BlackBerry (NYSE:BB) was one of the stranger companies to be part of the meme stock movement. The company is best known for its namesake mobile devices. Nevertheless, the low share price at the beginning of the year made BlackBerry an attractive name for retail investors. In the first month of 2021, BB stock shot up from its 52-week low to its 52-week high. That's a 281% increase for investors.
But like many meme stocks, BB stock didn't hold those gains. However, as the company gets ready to report earnings on December 21, 2021, the stock is testing a low last that could provide a level of support. And a good earnings report may be the catalyst the stock needs to move higher.
One of the reasons that some meme stocks have fizzled out is because their underlying business plan has fundamental flaws. But whether by good fortune of design, the retail investors who piled into BB stock look like they got it right. That's because if the stock goes up, it may be because the company's business plan is ready to pay off. And in this article, we'll look at three reasons why BlackBerry may be ready to move higher.
BlackBerry is Staying True to Its Roots
At the height of their popularity, people loved their BlackBerry devices for many reasons. One of the overlooked reasons was the safety and security that was built into their phones. That may sound surprising, but it shouldn't. At their core, BlackBerry has always been a cybersecurity company.
In 2020, an independent report conveyed that BlackBerry's cybersecurity solutions address 96% of all cybersecurity threats. And today cybersecurity accounts for approximately two-thirds of the company's revenue.
The global cybersecurity market is valued at $21 billion in 2021. However, according to at least one survey it's expected to grow to $345.4 billion by 2026. Even if BlackBerry only captures a fraction of that revenue, it would be a major catalyst for BB stock.
BlackBerry has strategic partnerships with both Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). In this article, we'll focus on the Amazon partnership which has to do with BlackBerry's Intelligent Vehicle Data Platform (IVY).
IVY is a scalable cloud-connected software program that has the potential to provide a universal solution for connected vehicles of all brands to find a safe and consistent way to collect data from the many sensors. In theory this will be a win-win for consumers and electric vehicle (EV) manufacturers. BlackBerry promises consumers an enhanced driving experience. And manufacturers should realize reduce costs, improved operations and additional revenue.
The biggest payoff for IVY will be with autonomous driving vehicles. That's a future that is still years away. But development is ongoing.
Saying Goodbye to the Past
It may seem strange that a bullish case for BB stock comes from the sale of the company's mobile device patents. Usually when a company is selling off their intellectual property, it's a sign of desperation. In the case of BlackBerry, it would have been that way if that was the company's only business.
But they've pivoted away from that and on the company's most recent earnings call, chief executive officer (CEO) John Chen put the odds at 80% that it would be able to complete the sale of its mobile device, messaging, and wireless patents portfolio in the quarter just ended. When the sale is complete, it could add anywhere from $1 billion to $1.6 billion to the company's bottom line. Prospective buyers will want to hear about the company's prospects when it reports earnings.
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