BlackBerry stock forecast: Is Blackberry a good stock to buy?
What is the BlackBerry stock forecast for the former mobile phone giant?
- Unlikely share boost
- BlackBerry quarterly report: Could be worse
- Making the best of things
- What the markets did
- BlackBerry stock forecast and recommendations
BlackBerry, once the mobile phone of choice for the yuppie set, has had a resurgence recently thanks to so-called 'meme' investing.
The firm's phones were widely used in the business world before the rise of iOS and Android, and the growth of touchscreen technology made its handsets look past their sell-by date.
BlackBerry transitioned its phones from its proprietory operating system to Android, but in 2016 announced it was licensing the design and production of future models.
The company – originally known as Research in Motion (RIM) – diversified and became a developer of cybersecurity and other specialist technology for business and industry, including carmakers, who use its software for safety-critical and driver-assistance systems.
In June this year, the company announced its BlackBerry QNX software is now embedded in more than 195 million vehicles, an increase of 20 million from the year before.
Unlikely share boost
BlackBerry's latest quarterly results have given a mixed message to investors after the business received a somewhat unlikely share boost earlier this year when it became a 'meme' stock – winning support from retail investors via social media – thanks to the WallStreetBets subreddit.
The online interest in the stock meant that the BlackBerry stock price went from an intraday high of $7.66 on 13 January to an intraday high of $28.77 on 27 January, a rise of more than 275% in just a fortnight and the highest the stock had reached since 2011.
Inevitably, the gains were not to last, with BB stock halving in the two days that followed. Although prices did remain a little elevated for about a month, they succumbed to pressure and fell below $10 once again at the beginning of March. Despite that, BlackBerry had garnered attention among the general public for the first time in a long while.
A dominant theme in the BlackBerry stock forecast of late has been the company’s efforts to monetise the patents it holds for technology relating to wireless networks, mobile devices and messaging. All of this will prove instrumental for giving licensing revenues a much-needed boost.
The Canadian company hit the headlines for all the wrong reasons in August when the United States Cybersecurity and Infrastructure Security Agency (CISA) said a flaw in BlackBerry's embedded QNX real-time operating system could put cars and medical systems at risk and lead to “a malicious actor gaining control of highly sensitive systems, increasing risk to the nation’s critical functions”.
BlackBerry acknowledged the issue and told people using the programme to install a patch and make sure their software was up to date, adding that while it was possible the flaw could be exploited, no one had yet done so.
BlackBerry quarterly report: Could be worse
BB price history
|Oct 20, 2021||11.30||0.14||1.25%||11.16||11.47||10.87|
|Oct 19, 2021||11.31||1.36||13.67%||9.95||11.61||9.87|
|Oct 18, 2021||10.00||-0.16||-1.57%||10.16||10.25||9.95|
|Oct 15, 2021||10.17||-0.03||-0.29%||10.20||10.48||10.00|
|Oct 14, 2021||10.16||0.40||4.10%||9.76||10.34||9.71|
|Oct 13, 2021||9.75||0.23||2.42%||9.52||10.05||9.43|
|Oct 12, 2021||9.46||0.27||2.94%||9.19||9.55||9.13|
|Oct 11, 2021||9.17||-0.10||-1.08%||9.27||9.40||9.15|
|Oct 8, 2021||9.30||-0.11||-1.17%||9.41||9.54||9.26|
|Oct 7, 2021||9.47||0.17||1.83%||9.30||9.64||9.19|
|Oct 6, 2021||9.31||-0.02||-0.21%||9.33||9.34||9.00|
|Oct 5, 2021||9.40||0.00||0.00%||9.40||9.72||9.40|
|Oct 4, 2021||9.47||-0.03||-0.32%||9.50||9.61||9.25|
|Oct 1, 2021||9.60||0.14||1.48%||9.46||9.79||9.46|
|Sep 30, 2021||9.63||-0.03||-0.31%||9.66||9.86||9.37|
|Sep 29, 2021||9.52||-0.19||-1.96%||9.71||9.85||9.46|
|Sep 28, 2021||9.71||-0.23||-2.31%||9.94||9.96||9.67|
|Sep 27, 2021||9.98||-0.15||-1.48%||10.13||10.25||9.85|
|Sep 24, 2021||10.24||-0.21||-2.01%||10.45||10.52||10.04|
|Sep 23, 2021||10.54||0.34||3.33%||10.20||10.92||9.86|
BlackBerry’s latest set of quarterly results, for the three months ending 31 August 2021 were not exactly what investors would have wanted to see from the company and could have caused a gloomy BlackBerry stock forecast.
For instance, the business’s revenue was down by almost a third from $259m in the same quarter last year to $175m. On the other hand, that was, according to Reuters, a better result than predicted by analysts surveyed by Refinitiv, who had forecast BlackBerry’s revenue would only reach $163.5m.
But if investors were thinking the better-than-expected revenue results were good news and were about to adjust their Blackberry stock predictions accordingly, the rug was pulled from under this potential positivity by the company’s operating costs.
These came to a total of $253m, up more than 14% year-on-year from $221. The debit side included $83m from the sales, marketing and administration department, $67m from a debentures fair-value adjustment, $58m from research and development and $45 from amortisation.
These costs, plus taxes, meant that BlackBerry had an overall net loss of $145m. In percentage terms, this represented a massive increase of more than 525%. The loss per share went from $0.04 per share to $0.25 a share year on year.
BlackBerry said that a non-cash accounting adjustment to the fair value of convertible debentures, due to market and trading conditions, accounted for approximately $0.12 loss per share.
Making the best of things
John Chen, BlackBerry’s executive chairman and chief executive, attempted to put a brave spin on things, saying in an earnings call: “I'm pleased with how the business performed, beating revenue expectations for all the businesses and delivered positive cash flow.”
In another statement, Chen said: “Revenue for all businesses beat expectations this quarter. The cyber-security business unit delivered robust sequential billings and revenue growth and the IoT [Internet of Things] business unit performed well in the face of global chip shortage pressures.
“We are already seeing benefits from establishing the two key business units and are delighted to appoint John Giamatteo as president of Cyber Security. Giamatteo, who was previously president and chief revenue officer at McAfee, adds leading industry expertise.
“In IoT, design activity for our QNX products remains very strong, demonstrating both our industry leadership position and secular trends, such as ECU consolidation. In cyber security we received strong third-party validation of the effectiveness of our AI-driven, prevention-first suite of products, illustrating progress made with recent product launches.
The company said that a drop in automobile production volumes due to Covid-19 closures and chip shortages would continue to affect the company in the next two quarters this financial year, although, according to Chen, the last quarter would represent a low point.
He said: “We continue to see the past quarter as the low point, but significant headwinds are expected to continue into Q3 and Q4 and perhaps even beyond that, albeit with a sequentially decreasing impact.
“The impact of the chip shortage on QNX royalty revenue is expected to be buffered somewhat by ongoing strength in design activities. We are comfortable with the current IoT revenue consensus, meaning the full-year revenue outlook remains unchanged.”
What the markets did
Although the overall set of results were gloomy, the fact that they outperformed expectations meant that the markets responded positively.
When markets closed on 22 September, before the quarterly results were announced, the BlackBerry share price was $9.56. This was actually down from where it had been a few days earlier when, on 9 September, it stood at an intraday high of $11.13.
When the markets reopened on 23 September, after the quarterly results were announced, the price was up more than 6% overnight to $10.16.
BlackBerry stock forecast and recommendations
With that said, the BlackBerry stock predictions are still not full of joy. The BlackBerry stock forecast for 2021 and 2022 could be interesting, depending on how people and the markets respond to the company’s actions.
The overall picture for the Blackberry stock prediction for 2021 and 2022 is a gloomy one, though. Out of seven analysts surveyed by CNN Money, the median forecast for the next 12 months was $8.50, a drop of 11.1% from where the BlackBerry stock price stood before the quarterly results came out.
There was at least one much gloomier prediction, with a forecast of $4.50 a share, representing a loss of 52.9%. There was still some room for optimism, though, with the highest BlackBerry stock forecast of $20 representing a more than doubling of the current price.
In terms of recommendations, the suggestions did not look too good for BlackBerry. Out of nine analysts surveyed by CNN, five recommended selling BlackBerry stock, one said the company would underperform expectations, two said to hold BlackBerry and just one recommended buying.
It potentially could be. That depends if its recent unlikely rise is sustainable and if the company’s work with carmakers can blossom post-pandemic. However, we do have to point out that, while forecasts can often be wrong, the forecasts are gloomy, with an average prediction that the stock will fall over the next year. You will have to do your own research.
At first glance, it looks like it will not, but there is always the potential that the recent boost could lead to a sustained bull market of sorts. It is also possible that it could, once again, become a meme stock for a short period of time. You do need to remember, though, that prices can, and often do, go down as well as up.
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