Is BlackBerry Stock A Buy? What Fundamentals, Fund Ownership Metrics And Chart Action Say

Veteran merchants and traders might recall how Canada’s Research In Motion, which developed the wildly profitable BlackBerry smartphone within the 1990s and 2000s, was an excellent inventory. And in early 2004, BlackBerry inventory, recognized by the ticker image RIMM on the time, constructed the gold customary for a uncommon chart sample recognized by IBD: the short stroke.


A lot has modified since then, to say the least.

BlackBerry (BB) does not make smartphones anymore. Yet it boasts a market-crushing acquire of greater than 130% yr thus far.

BlackBerry inventory has additionally captured consideration as one in every of a cadre of firms which were closely bought brief in recent times. Equity and choice merchants becoming a member of the WallStreetBets thread on Reddit and different on-line social platforms have orchestrated gorgeous campaigns to ship not solely BlackBerry inventory to stratospheric heights. They’ve accomplished the identical with AMC Entertainment (AMC) GameStop (GME), Bed Bath & Beyond (BYND) and Clover Health (CLOV).

So, is BlackBerry inventory a purchase now?

This story will study the inventory by way of the lens of IBD’s time-tested, research-driven CAN SLIM method — a seven-point paradigm for profitable inventory choosing. A have a look at fundamentals, technicals and mutual fund sponsorship may also help you make an knowledgeable alternative.

Company History

Founded in 1984 in Waterloo, Canada, BlackBerry’s internet-enabled smartphones turned iconic through the dot-com bubble and even after the Nasdaq’s market prime in 2000. During the primary half of that decade, BlackBerry turned so addictive that some customers referred to as their units “CrackBerry.” Former U.S. President Barack Obama used one within the White House.

But as competitors stiffened within the smartphone area and the expansion of BlackBerry’s gross sales and earnings misplaced luster through the again half of the 2000s and early 2010s, the corporate made a pivotal swap.

Today, the corporate, led by CEO John Chen, gives safety software program and companies to enterprise and authorities clients globally. BlackBerry says it secures greater than 500 million endpoints, together with 175 million automobiles on the highway as we speak. It employs synthetic intelligence and machine studying to maintain buyer information protected and personal.

On May 17, the corporate introduced BlackBerry Optics 3.0, a next-generation cloud-based safety product, in addition to a brand new zero-trust network access product referred to as BlackBerry Gateway.

Earlier in May, Frost & Sullivan named BlackBerry an innovator in well being care cybersecurity. And Chinese EV maker WM Motor stated it selected BlackBerry’s QNX branded merchandise to energy its superior W6 SUV.

BlackBerry, Meme Stock

Judging by the spectacular transfer BB inventory made within the remaining two weeks of January, little question BlackBerry has symbolized the intention by Robinhood app customers and different merchants to go after brief sellers.

Short sellers promote shares borrowed from a dealer. They hope to purchase these shares again at a cheaper price for a tidy acquire. But when a inventory surges in value, the shorts get compelled to purchase again shares and shut the commerce — particularly when a buying and selling account is already on margin.

Short protecting can act like nitro to a rising inventory.

The skyrocketing transfer by BlackBerry over a four-week time interval, going from 6.63 firstly of January to a peak of 28.77 Jan. 27, illustrated the hazards for brief sellers as we speak.

Right now, brief curiosity in BlackBerry inventory — or whole shares bought brief on Wall Street — isn’t excessive.

Short Interest And BlackBerry Stock

Inside Investor’s Corner: How To Analyze Short Interest In A Stock

Some 50 million shares, or roughly 1.Three occasions BlackBerry’s common every day turnover over the previous 50 periods of 38.5 million shares, have been bought brief, in accordance with information analyzed by MarketSmith. So, it could take lower than two days’ value of BlackBerry buying and selling quantity for the brief sellers to purchase shares and canopy their bearish positions.

As a portion of the inventory’s float of 560 million shares, it is a important degree however not excessive.

In late January, BB inventory engineered a climactic top. Shares rose 105% through the week ended Jan. 29 earlier than retracing almost all of that acquire by week’s finish.

In different phrases, its vertical-like transfer was unsustainable.

IBD Ratings Today

BlackBerry’s fundamentals don’t measure as much as, say, these in IBD’s Long-Term Leaders.

The firm’s earnings grew vs. year-earlier ranges simply twice previously eight quarters. In the November-ended fiscal third quarter, earnings sank 33% to 2 cents a share. Sales dropped 18%. The February-ended fiscal fourth quarter echoed this poor efficiency: The backside line plunged 67% to three cents a share. A 25% drop in gross sales to $210 million notched the worst year-over-year drop in at the least 4 years.

Since earnings are typically the No. 1 issue for a inventory’s progress prospects, it could come as no shock that BlackBerry will get lackluster rankings from IBD. The Composite Rating of 56 is middling on a scale of 1 (mauled) to 99 (magnificent). The SMR Rating, which analyzes gross sales, revenue margins and return on fairness, is a lowly D on a scale of A to E.

BlackBerry additionally will get a 56 Earnings Per Share Rating on a scale of 1 to 99. Generally, you need to focus your watchlist of shares of these with EPS and Composite scores of 80 or increased.

Who Is BlackBerry Owned By?

That stated, institutional possession has been rising.

Total mutual funds investing in BlackBerry inventory dipped to 484 on the finish of the second quarter in 2020, when coronavirus ravaged the world economic system. Yet that quantity has grown to as excessive as 548 on the finish of Q1 of this yr.

A inventory seeing rising mutual funds possession and attracting top-notch institutional gamers is meeting the I in CAN SLIM, or stable institutional sponsorship. A-rated funds that personal a chunk of BB inventory embody Mercator International Opportunities (MOPPX), Vanguard Primecap (VPMCX) and Beck, Mack & Oliver Partners (BMPEX).

On the plus facet, BlackBerry inventory is displaying terrific value energy.

Is BlackBerry Stock A Buy?

The 96 Relative Strength Rating means BB inventory has outperformed 96% of all firms within the IBD database over the previous 12 months.

And proper now, after shares discovered bullish assist on the 200-day shifting common — drawn in black in all IBD daily charts and in MarketSmith, the chart exhibits a brand new deep-cup pattern forming.

A deal with has not but shaped; such motion would trace at a final shakeout of disenchanted holders who purchased at increased costs, desperate to get out with a small acquire or to chop losses after sitting with an enormous paper loss. So, the current buy point for now’s 28.87, 10 cents above the cup’s left-side excessive.

That stated, current motion clearly exhibits the 20 value degree is providing near-term value resistance.

So whereas the inventory isn’t but a purchase now, a robust transfer previous the 20 spherical quantity might supply intrepid merchants a brand new entry.

Please comply with Chung on Twitter: @saitochung and @IBD_DChung


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