BlackBerry: Reddit Strikes Back, But Not For Long

seekingalpha2021-06-09

Summary BlackBerry’s stock has been appreciating on heavy volume in recent weeks, as retail traders once again began to purchase it in bulk, as they did so earlier this year. We believe that the ...

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Comments

Hcee
2021-06-09
Hcee
Spilled garbage
Greysuntan
2021-06-09
Greysuntan
SeekingAlpha has all this while been shting on so called memestocks. Lots of fud from this platform.
我会成为小富婆
2021-06-09
我会成为小富婆
Liked and comment. Bb chiong
- 627ac981:
  Reply pls
Dixon235
2021-06-09
Dixon235
Oh
Seaside
2021-06-09
Seaside
Careful!
- Oldie:
  Like n comment. Thanks
JKJKJK
2021-06-09
JKJKJK
Pls like and comment.
- JoshyQ:
  Ok
- DonWong:
  Like and comment

Leave a comment

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However, despite such an aggressive increase in price, we believe that the current momentum is going to be short-lived, as there are no signs that BlackBerry will finally reorganize its business and drive growth anytime soon. In addition, since the company already trades at irrationally exuberant levels, it's hard to justify its current valuation due to the lack of new growth catalysts. For that reason, we believe that it's better to avoid BlackBerry at the current price.\nRetail Traders Are Back\nAfter losing its market share in the mobile business nearly a decade ago, BlackBerry has been looking for ways to reorganize itself and return to the path of profitability. Currently, the company is engaged in the development of software for the cybersecurity, automotive, and IoT fields and its core products are an operating system for cars called QNX and a cloud-connected software platform called IVY. In addition, the company also generates revenues by licensing its patented tech to other businesses. The problem is that despite all of this, BlackBerry still can't regain its competitiveness to this day, as it constantly loses money and its earnings are declining year after year.\nHowever, this hasn't stopped its stock from appreciating in value in recent weeks, as retail traders, mostly from Reddit's Wall Street Bets community, onceagainbegan to purchase the company's shares in bulk, and now own the majority of the business.\nChart: Seeking Alpha\nWe don't see any rational explanations for such an appreciation and believe that the current momentum is not going to last long since BlackBerry's financial performance is unlikely to improve anytime soon. InQ4alone, BlackBerry's revenue of $215 million was down 26.1% Y/Y, below the estimates by $32.87 million, while its GAAP EPS of -$0.56 was also below the estimates by $0.53. In addition, the company's net loss during the period also winded to $315 million, from $41 million a year ago. On top of that, BlackBerry has also failed to meet its FY21 revenue forecast of $950 million, as its revenue for the fiscal year was $893 million, down from $1.04 billion a year ago. Its net loss for the year was $1.1 billion, against a net loss of $152 million a year ago as well.\nThe biggest problem of BlackBerry at this stage is that the current management has been trying to redefine the business and turnover the company for the last 8 years, but nothing has worked so far. The company has been constantly announcing new partnerships with tech behemoths such as Amazon (AMZN), Baidu (BIDU), and others, but that hasn't led to any major growth or improvement of the overall business. What's even worse is that BlackBerry for years has also been purchasing other products and companies, which in the end led to the further destruction of shareholder value. The company's purchase of a cybersecurity firm Cylance for $1.4 billion a few years back is a perfect example of such value destruction. While before the acquisition, Cylance was constantly improving its top line performance, after the purchase by BlackBerry its revenues started to decline as competitors such as CrowdStrike (CRWD) began to take over the market. Considering the bad performance of Cylance after the purchase, BlackBerry stopped disclosing its earnings and began to mix them with the earnings of its other software products.\nOn top of that, it also seems that BlackBerry's current core products such as QNX and IVY also don't have any major advantages against others. While BlackBerry says that its software is used in over 100 million cars, its financial performance is not improving, while competitors such as Google (GOOG)(GOOGL), Apple (AAPL), and Cerence (CRNC) are aggressively expanding their presence in the automotive software market. Considering that those tech behemoths have significantly more resources to expand, there's a risk that BlackBerry's market share in the automotive software market will decline as well. Ford (F) has alreadydroppedBlackberry's QNX operating system and announced that it will implement Google's system in its cars in the foreseeable future, and there's a risk that other major legacy automakers will do so as well.\nAs for BlackBerry's licensing business, there's also a risk that it will no longer drive growth as before. The company's licensing revenues in Q4 were already lower than in Q3, and after selling 90 patents to Huawei earlier this year its overall business will be making even less money than before.\nAs BlackBerry's business is in decline, there's also no clear roadmap for a turnaround from the management team. As a result, in FY22 the street expects BlackBerry to generate even fewer revenues than in FY21 and it also doesn't believe that the company will be able to reach its FY20 top-line performance levels in the next couple of years. On top of that, BlackBerry is also expected to lose money this year and make only a small profit in FY23.\nSource: Seeking Alpha\nConsidering all of this, we don't believe that investors should expect any positive surprises from the upcoming Q1 earnings report, which will be released later this month. On top of that, since BlackBerry currently trades at a 2023 P/Eratioof ~200x and a 2023 price-to-sales ratio of over 9x, we also believe that the company is extremely overvalued and should be avoided at the current levels, as its upside is limited in the long run. Therefore, while the recent heavy buying from retail traders helped to push BlackBerry's stock higher, we believe that the current momentum will be short-lived, as there's every reason to believe that the company's business will continue to struggle.","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":189084162,"gmtCreate":1623233150656,"gmtModify":1704198906829,"author":{"id":"3582091436806594","authorId":"3582091436806594","name":"Hcee","avatar":"https://static.tigerbbs.com/25691c3778284b9d2886651b3876e2a0","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3582091436806594","authorIdStr":"3582091436806594"},"htmlText":"Spilled garbage&nbsp;","listText":"Spilled garbage&nbsp;","text":"Spilled garbage","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/189084162","repostId":1113184713,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":180724825,"gmtCreate":1623228312667,"gmtModify":1704198792782,"author":{"id":"3555387918238957","authorId":"3555387918238957","name":"Greysuntan","avatar":"https://static.tigerbbs.com/ece16322ae91656fe9fd7280a6ecc439","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3555387918238957","authorIdStr":"3555387918238957"},"htmlText":"SeekingAlpha has all this while been shting on so called memestocks. Lots of fud from this platform.","listText":"SeekingAlpha has all this while been shting on so called memestocks. Lots of fud from this platform.","text":"SeekingAlpha has all this while been shting on so called memestocks. Lots of fud from this platform.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/180724825","repostId":1113184713,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":180767025,"gmtCreate":1623227975567,"gmtModify":1704198780648,"author":{"id":"3564041372367572","authorId":"3564041372367572","name":"我会成为小富婆","avatar":"https://static.tigerbbs.com/cc81530dfc76889190c0083ac7558dcb","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3564041372367572","authorIdStr":"3564041372367572"},"htmlText":"Liked and comment. &nbsp;Bb chiong","listText":"Liked and comment. &nbsp;Bb chiong","text":"Liked and comment. Bb chiong","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/180767025","repostId":1113184713,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4647586,"gmtCreate":1623228830317,"gmtModify":1663228271831,"authorId":3568342145233430,"author":{"id":3568342145233430,"idStr":"3568342145233430","authorId":3568342145233430,"name":"627ac981","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":180767025,"type":1,"supId":0,"prevId":0,"content":"Reply pls","text":"Reply pls","html":"Reply pls"}],"langContent":"EN"},{"id":180760856,"gmtCreate":1623227522675,"gmtModify":1704198768978,"author":{"id":"3580616034412272","authorId":"3580616034412272","name":"Dixon235","avatar":"https://static.tigerbbs.com/a4bb6ac364564ebe1e6f4893f26073f8","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3580616034412272","authorIdStr":"3580616034412272"},"htmlText":"Oh","listText":"Oh","text":"Oh","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/180760856","repostId":1113184713,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":180780789,"gmtCreate":1623227027641,"gmtModify":1704198757375,"author":{"id":"3570963409805949","authorId":"3570963409805949","name":"Seaside","avatar":"https://static.tigerbbs.com/b094e0cc1e06886145a19173ee763445","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3570963409805949","authorIdStr":"3570963409805949"},"htmlText":"Careful!","listText":"Careful!","text":"Careful!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/180780789","repostId":1113184713,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4647404,"gmtCreate":1623227902315,"gmtModify":1663228270836,"authorId":3584415246670106,"author":{"id":3584415246670106,"idStr":"3584415246670106","authorId":3584415246670106,"name":"Oldie","avatar":"https://static.tigerbbs.com/09a7a0c9fe9b5b416d6f049746ddfa29","vip":1,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":180780789,"type":1,"supId":0,"prevId":0,"content":"Like n comment. Thanks","text":"Like n comment. Thanks","html":"Like n comment. Thanks"}],"langContent":"EN"},{"id":180780275,"gmtCreate":1623227016397,"gmtModify":1704198755596,"author":{"id":"3581988841626176","authorId":"3581988841626176","name":"JKJKJK","avatar":"https://static.tigerbbs.com/882030abc3e0ffb1122b6a566ab01832","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3581988841626176","authorIdStr":"3581988841626176"},"htmlText":"Pls like and comment.","listText":"Pls like and comment.","text":"Pls like and comment.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/180780275","repostId":1113184713,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4647340,"gmtCreate":1623227635248,"gmtModify":1663228270726,"authorId":3574925827192931,"author":{"id":3574925827192931,"idStr":"3574925827192931","authorId":3574925827192931,"name":"JoshyQ","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"currentWearingBadge":{"badgeId":"23f878ed27704312ae41c7f17e73b319-6","templateUuid":"23f878ed27704312ae41c7f17e73b319","name":"Annualised return","description":"Top 3%","bigImgUrl":"https://community-static.tradeup.com/news/6fbaa8e552e02eae8e6a2ce5d6566431","smallImgUrl":"https://community-static.tradeup.com/news/98862e418516dab972bed7aaf561dec6","grayImgUrl":"https://community-static.tradeup.com/news/3a5ca933a5695ed2e862b228f6c09ee5","redirectLinkEnabled":0,"redirectLink":"https://www.tigerbrokers.com.sg/activity/market/2023/stock-contest?adcode=StockContest2023","hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.02.14","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":5300},"crmLevel":9,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":180780275,"type":1,"supId":0,"prevId":0,"content":"Ok","text":"Ok","html":"Ok"},{"id":4647208,"gmtCreate":1623227029127,"gmtModify":1663228270635,"authorId":3581492973083950,"author":{"id":3581492973083950,"idStr":"3581492973083950","authorId":3581492973083950,"name":"DonWong","avatar":"https://static.tigerbbs.com/f8843910928a23f2647323acafb55c9a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":180780275,"type":1,"supId":0,"prevId":0,"content":"Like and comment","text":"Like and comment","html":"Like and comment"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":23,"commentSize":9,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1113184713"}