Blackberry Stock Down 7% in September – Time to Buy BB Stock?

0

Blackberry’s stock price is down for the fourth day in a row this morning as it slips nearly 2% to $10.6 per share as shares of the former smartphone maker, now a cybersecurity company , have lost 7% of their value since the month started.

In August, the company made many important announcements. One of them was the launch of a solution for vehicle-based payments – a market estimated at €530 billion by 2030.

Additionally, during the same month, the Cybersecurity & Infrastructure Security Agency (CISA) issued a warning about a vulnerability in one of the older versions of the company’s QNX real-time operating system that could compromise the operation “highly sensitive systems” powered by this resolution.

However, the agency said it has no information about any incidents involving the exploitation of this vulnerability.

Could the price of the Blackberry continue to fall despite the absence of catalysts explaining this latest drop?

In the following article, we take a closer look at price developments while providing information on the company’s historical financial performance to outline plausible scenarios for the future.

67% of all retail investor accounts lose money when trading CFDs with this provider.

Blackberry Stock – Technical Analysis

Blackberry (BB) Price Chart – 1-Day Candles View with Multiple Indicators – Source: TradingView

Blackberry’s stock price bounced off a long-standing downtrend line on August 20, and this move was followed by two sharp rises accompanied by above-average trading volumes.

However, the rise was short-lived as the price ended up posting a lower high, indicating weakness in the stock’s current momentum.

The stock’s last price action formed a symmetrical triangle pattern that could break out in any direction as this formation is generally considered directionally unbiased – meaning it is not bullish or bearish in itself.

Going forward, a break above or below this rectangle may indicate a clearer directional outlook for the stock.

Until this break occurs, the most plausible prediction for BB stocks is that price action may soon mark the lower trendline for the fourth time, resulting in an 8.5% downside risk.

Blackberry will attend the upcoming Jefferies Software Conference which is scheduled to take place on September 14th. Further news regarding the rollout of the company’s recently launched vehicle-based payment solution could affect its price action.

Blackberry Stock – Fundamental Analysis

Blackberry’s revenue has fallen steadily over the past four years, from $1.3 billion in 2017 to $893 million last year.

Meanwhile, gross profit margins declined but remained above 70% over the same period. That said, the company has failed to achieve positive operating profitability while its GAAP net income has been quite volatile, going from a net loss of $1.2 billion in 2017 to positive territory over the past few years. following two years and then falling to another steep loss of $1.1 billion last year. .

The success of the company’s pivot to cybersecurity after the sale of its once-successful smartphone unit is still in question, and while progress has been made, it remains to be seen whether Blackberry’s management team will pull it off. guide the company towards positive profitability in the future.

In terms of solvency, the company held $703 million in cash and cash equivalents at the end of the first quarter of its fiscal year 2022 and had total long-term debt of approximately $800 million on total assets of $2.7 billion. of which $1.58 billion in intangible assets.

At its current market cap of $6.9 billion, the company is valued at 8.1 times its expected sales for the next twelve months.

Since Blackberry’s core assets are primarily intangibles (patents, trademarks, and other intellectual properties), its current valuation makes it a potentially attractive target for acquisition given the positive momentum in the cybersecurity space.

In this scenario, the stock may offer an advantage to buy-and-hold investors, but other than that, if the company remains an independent business, its valuation looks quite stretched given its deteriorated fundamentals and uncertain future.

Buy BB shares on eToro from just $50 now!

About Alejandro Arrieche PRO INVESTOR

Alejandro is an independent financial analyst with 7 years of industry experience. He writes technical content on economics, finance, investments and real estate and has also helped financial companies develop their digital marketing strategy. His favorite subjects are value investing, macro analysis and technical analysis. Other publications Alejandro has written for include The modest walletand Capital.com.

Share.

About Author

Comments are closed.