Is Blackberry stock a good buy after its quarterly earnings?

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Jun 25, 2021
  • The Blackberry stock rose after its quarterly results.
  • The company’s revenue declined by 15.5% YoY in the quarter.
  • This decline was better than what analysts were expecting.

The Blackberry (NYSE: BB) stock price rose slightly as investors reacted to the company’s quarterly results. The stock rose by almost 1% in the premarket session to $12.80, bringing its total market capitalisation to more than $7.1 billion.

Blackberry earnings

Blackberry, the meme company, released relatively strong quarterly results. Its revenue declined by 15.5% from the same quarter in 2020. This was about $2.96 million better than what Wall Street analysts were expecting. The company also narrowed its loss from more than $315 million in 2020 to $62 million. Subsequently, its diluted loss per share improved from 56 cents to 11 cents. 

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The company generated most of its revenue from its cybersecurity business. Its revenue came in at $107 million. It was followed by its Internet of Things (IoT) and licencing, whose revenue came in at $43 million and $24 million, respectively. 

The company made some milestones in the quarter. For example, Volvo Group selected its Blackberry QNX operating system as its key software for its trucks. It also partnered with WM Motor, and BiTECH Automotive. Further, the number of cars embedded with QNX soared to more than 195 million. In a note, the CEO said:

“Design activity remains strong, the number of vehicles with QNX software embedded has increased to 195 million, and royalty revenue backlog grew by 9% year-over-year.  Tangible progress continues to be made with BlackBerry IVY”

What next for Blackberry stock?

Blackberry has become one of the best-known meme stocks. The shares rose from $4.5 in November to almost $30 in February. It then declined by 73% to $7.67 in May. Later on, the shares rose by more than 160%. As a result, many Wall Street analysts have avoided making predictions about the shares. 

The most recent call on Blackberry was from Canaccord Genuity who boosted their target to $10. Other analysts who have rated the stock this year are from Raymond James, Scotiabank, and Royal Bank of Canada (RBC).

Still, the company is facing pressure in many areas. For one, its revenue has been on a downward trend for years, putting pressure on the management. Total revenue dropped from more than $1.3 billion in 2018 to more than $893 million in 2020. Analysts expect that this revenue will fall to $796 million this year. Blackberry also faces competitive challenges across its IoT and Cybersecurity business. 

Blackberry stock price analysis

Blackberry stock price
Blackberry stock price chart

The daily chart shows that the BB stock price has retreated after it rose to $20 this month. The shares have dropped to the 61.8% Fibonacci retracement level. It is also being supported by the 25-day and 50-day exponential moving averages. It also seems like it is forming a falling wedge pattern, which is usually s bullish signal. 

Therefore, while the Blackberry stock will continue being volatile, there is a possibility that it will keep rising as bulls attempt to move above the year-to-date high of $28.

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