BlackBerry is Having Growing Pains That Will Keep it in Penny Stock Range

BlackBerry will need more than its iconic name to impress investors 

BlackBerry (NYSE:BB) stock took a plunge the day after reporting mixed earnings. The company beat on non-GAAP earnings and surprised with a positive 6 cents per share as opposed to the negative one cent per share that analysts expected.  

And the miss on revenue wasn’t terrible. The real issue for the company was its forward guidance. In 2021, the company received a considerable amount of revenue from licensing sales of patents from its legacy mobile device business. That revenue has mostly been accounted for and that means going forward the company will have to rely on the other business units to pick up the slack. 

Therein lies the problem.  

BlackBerry posted $749 million in revenue in 2021. That was down from the year before. And next year, management is guiding for $705 million on the high end. That makes for some tough math.  

Going forward the company will make its revenue primarily through its cybersecurity products and its IoT products. At its core, BlackBerry has always been about cybersecurity. However, on the company’s earnings call, it said it expects revenue from the cyber sector to be flat in 2022.  

Meaningful Revenue is Years Away 

That leaves the company’s IoT solutions. And that brings us to IVY, the company’s scalable cloud-connected software program. IVY is an acronym for Intelligent Vehicle Data Platform. It has the potential to provide EV manufacturers with a universal solution that allows them to collect data from multiple sensors in a safe, consistent way.  

BlackBerry touts IVY as a being a win-win for consumers and EV manufacturers. Consumers will get an enhanced driving experience. And manufacturers will benefit from lower costs, more efficient operations, and higher revenue. This will particularly true with autonomous vehicles. And BlackBerry does have partnerships with Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). However, that future is years away. 

BB Stock is a Story For Another Day 

On two separate occasions in 2021, BB stock got caught up with the meme stock movement. It seemed like an odd edition to this band of stocks. However, the company’s name denotes an iconic brand. Perhaps some retail investors were lost in nostalgia.  

And the stock was cheap. A recognizable name and a cheap price went a long way. I wrote about BlackBerry several times in 2021 and I always cautioned investors that the meme stock mania could distract them from what was really going on with BlackBerry.  

I find myself rooting for BlackBerry. It’s a company that’s always been rooted in security. And it may have a role to play in cybersecurity. It also may have a role to play in autonomous vehicles.  

The problem that I have with BlackBerry is that the company is relying on too many factors that are out of its control. Right now that includes semiconductor chips, supply chain difficulties, and automotive production schedules. And that makes it hard to see a reason to buy the stock right now.  

Is there a long-term story here? I still believe there may be. But at this point, the company is projecting full-year revenue to be lower than in 2021. And that will put pressure on what an already high valuation. In summary, BlackBerry is not a meme stock, unfortunately it’s not a buy at this time either.