The Real Potential in BlackBerry May Still be Years Away

BlackBerry (NYSE: BB) stock is adding to its gains after gapping up following a positive earnings report. The company beat expectations on both the top and bottom lines. Over the next couple of weeks, investors will get a chance to see if the report is enough to move the needle with analysts.  

However, the story of BlackBerry in 2021 has been about the retail investor. On two separate occasions, retail investors have sent BB stock to levels it hadn’t seen in five years. Both times, the stock has failed to hold those gains. Is this the beginning of a third attempt? And if so, will that attempt successfully push the stock higher? 

In my opinion, the answer to the first question is it’s too early to tell. And to the second question, I would say that if it does, I’m not sure it would be long-lasting. However, that doesn’t mean that Blackberry isn’t worth a closer look for risk-tolerant, patient investors.  

A Software Company at Heart 

To individuals of my generation, the first thing that comes to mind when we hear BlackBerry is the company’s mobile phone that took the world by storm in the early 2000s. However, even then, the products were known for their safety and security. That was a reflection of the company’s roots as a software company. 

That’s why it’s not a reach for the Canadian company to be emphasizing cybersecurity. It’s a natural extension of where it was. And currently, cybersecurity sales account for approximately two-thirds of the company’s revenue.  

Strategic Partnerships Will Keep BlackBerry Competitive 

When cybersecurity companies are advertising on national television, you know that this is becoming a crowded trade. There are loads of competitors that may put a ceiling on BlackBerry’s growth. However, investors can take note of the company’s partnership with Microsoft (NASDAQ: MSFT).  

Initially this partnership was about integrating BlackBerry’s “AtHoc” program into Microsoft Teams. But with Microsoft making investments into cybersecurity, it’s not hard to believe that there will be more business coming BlackBerry’s way.  

The Real Growth May be Years Away 

Earlier this year, I'll admit to being excited about BlackBerry’s partnership with Amazon (AMZN). This has to do with the company’s Intelligent Vehicle Data Platform (IVY). According to BlackBerry, IVY  “will allow automakers to provide a consistent and secure way to read vehicle sensor data, normalize it, and create actionable insights from that data both locally in the vehicle and in the cloud.” 

And the company’s partnership with Amazon is a first attempt at creating a common app that can be used across the connected vehicle landscape. However, as many industry analysts are quick to note, autonomous driving is years away. And while BlackBerry is likely to realize revenue before these vehicles are in production, it still means that, for now, this will remain a laggard in terms of overall growth.  

Buy the Dips on BB Stock 

In a year when some low-priced stocks seemed to draw retail attention simply because of their low price, I believe retail investors have the right idea about Blackberry. The company is generating growing revenue in its cybersecurity products. And, although autonomous vehicles may be years away, Blackberry has an attractive partnership in that category. In fact, many analysts believe that the company’s Internet of Things (IoT) business will be Blackberry’s real growth driver.  

However, after two exuberant rallies in the past nine months, BB stock continues to find resistance above $10. In fact, the consensus price target for BB stock is $9.70. At this point, the pattern is well defined. BlackBerry is a viable trade for now, but investors who are looking to take out a long position may want to see real growth in the company’s business.