Why the BlackBerry Stock Rally won’t last
BlackBerry Actions (NYSE: BB) has risen over 30% in the past five trading days, significantly outperforming the S&P 500 which has remained roughly stable over the same time frame. The rally appears to be fueled by trends similar to what we saw in January, as retail investor groups doubled their shares in small and mid caps with a high level of short-term interest, in order to trigger sharp price increases and put pressure on short sellers. BlackBerry – with a share price close to single digits – and near 10% short interest would likely have benefited. Now is BlackBerry stock poised to recover further or should we expect it to correct from current levels? We believe there is a high probability that BlackBerry stock will fall in the next month (twenty-one trading days) based on our machine learning analysis of historical stock price trends. See our analysis on BlackBerry Stock Chances to Raise for more details.
We also believe the long-term outlook for BlackBerry stock is bleak. BlackBerry operates in some very high growth markets, including automotive software and cybersecurity, and has made multiple strategic acquisitions and forged many leading partnerships. However, competition in these markets is intense and BlackBerry’s performance so far has been poor. Revenue has declined almost steadily over the past decade and is poised to drop another 10% during the year. Significant profitability does not seem likely in the short term either. BlackBerry’s valuation appears high from historical levels, with the stock trading almost 8 times futures earnings, down from just over 3 times at the end of last year.
Are you looking for reasonably priced software stocks with a lot of room for growth? Discover our theme on Mid-cap SaaS stocks