What happened?
The company reported a third-quarter net income of $74 million, or a loss of 5 cents a share on a diluted basis, compared with a loss of $130 million, or 23 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were break-even a share.
Earlier this year, BlackBerry stock was included in the so-called meme basket targeted by retail traders who sent shares soaring. In January, the stock touched as high as $28.77 a share but it has since been cut to about a third that price. Shares have still outpaced the broader market, closing Tuesday up almost 40% since Jan. 1.
Some facts.
Long gone are the days when a BlackBerry (BB) phone would make an ideal Christmas gift, although investors will be looking for some degree of holiday cheer when the once leading smartphone maker turned software specialist reports Q3FY22’s.
Yes, the company is trying to become a software specialist, but it is not now!
As 2021 is coming to its end, should terminate once and for all its meme stock status that sent it to perform relatively well amid poor fundamentals. The best option to survive and become a leader in the technology sector would be to find its economic moat and explore it as much as possible, whether this is the cybersecurity business, the IoT, or the applications related to the automotive industry.
What should we do?
As we all know, trying to jump on the latest trending stock can be an incredibly dangerous strategy. It's a much safer approach to buy shares of a company before or after a euphoric run-up in price. There's less noise and it's easier to not rush into a decision you may later regret. Even the BlackBerry revenue beats estimates, I continue to argue that BB stock is better to be avoided until its financial performance gets improved significantly.
It may well be that in 2022 if the automotive industry solves its global chip shortage problem, Blackberry may get a revenue boost supplying its IVY and QNX technologies.
The Cyber Security segment has not yet found a way to lead the path to sustainable sales growth.
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