BlackBerry is a Tough Buy That Will Test Investor Patience

BlackBerry (NYSE:BB) has been under strong selling pressure in the last month. However, the meme stock is still up 38% year-to-date. But with BB stock down 8.9% in the last month and investors getting ready to turn the page on 2021, should speculative investors remain patient while BlackBerry’s business model comes to fruition?  

That’s a tough ask, but that’s different from saying it’s impossible. Right now, BB stock has a couple of long-term catalysts. However, investors looking at its current fundamentals may be scared away. 

Year-over-year revenue for the company’s first two quarters is down 26%. Help could be on the way in the form of revenue that the company intends to receive by selling many of its mobile device patents.  

It’s not surprising that BlackBerry is cutting ties from the namesake mobile device that made the company a household name. However, the emergence of the smartphone ended BlackBerry’s supremacy. Selling off the intellectual property will add some much needed revenue to the bottom-line. 

But the deal has taken some time and based on recent price action, investors are losing patience. Nevertheless, when the company last reported earnings, Chief Executive Officer John Chen said there was an 80% chance that the sale would be completed by the quarter’s end, which will occur in February 2022. 

The larger question, however, is how long investors will have to wait for the company’s other business units to deliver revenue.  

BlackBerry’s Future is Also Its Past 

I’ve always said I’m old enough to remember when the BlackBerry was a status symbol. But aside from being the precursor to our current smartphone addiction, many people loved the safety and security of their BlackBerry devices.  

This focus on cybersecurity is not just part of BlackBerry’s past, but it’s also a key element of the company’s future. In fact, cybersecurity solutions from BlackBerry QNX accounts for nearly 66% of BlackBerry’s revenue. And the global cybersecurity market is expected to be valued at $345.4 billion by 2026. As it is currently valued at $183.34 billion, that’s an increase of around 88% in the next five years. 

That’s not the only catalyst for BlackBerry. The company is also competing in the autonomous vehicle space with its Intelligent Vehicle Data Platform (IVY). This is a scalable, cloud-connected software program that BlackBerry is offering as a universal solution for connected vehicles. According to BlackBerry, the IVY system delivers on three key objectives. 

First, it accelerates development of “new in-vehicle customer experiences.” It also opens opportunities for connected vehicle manufacturers to expand their community of app developers. And it does all of that while streamlining costs.  

However, the real payoff for IVY won’t take place until automated vehicles become a reality. While analysts may disagree on the exact length of time for that to happen, it’s measured in years, not months. 

Analysts Are Sending Mixed Messages

The consensus rating for BB stock is a Sell. However, analysts put the consensus 12-month price target for BlackBerry at $9.40. That’s a $7.67 upside. That means if there is a broader sell-off investors may want to consider buying BlackBerry at around $7.60.  

That would be in-line with the stock’s most recent rating from Paul Treiber of the Royal Bank of Canada. On Dec. 17, Treiber gave the stock an Underperform rating with a $7.50 price target.  

However, after a sharp selloff, BB stock is presenting investors with a potentially bullish technical pattern that may allow the stock to move higher, particularly if it beats expectations when it reports earnings.  

Can BB Stock Get it Right? 

I don’t currently own BB stock, but it is one of the meme stocks that I find intriguing. That’s because its underlying business plan has potential. However, it’s likely to be several years before that potential is realized. For that reason, I’ll be keeping BlackBerry on my watch list, but I’ll be staying on the sidelines until I hear more.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.