Blackberry: Invest Or Avoid?

Should you invest in BlackBerry right now? Well, it depends.

BlackBerry Limited (BB) is a Canadian company that has transformed itself from a market-leading smartphone maker to a cybersecurity company. The stock has its fans, but it has been trading sideways since mid-2021. While some analysts are bearish on BB, others see reasons for optimism.

On the positive side, BlackBerry is viewed as a top security provider, with solutions that address more than 96% of cyberthreats. The global cybersecurity market is growing, and if BlackBerry remains a relevant player, it could benefit from industry tailwinds. The company also has a strong position in the connected auto market, with its QNX operating system used by 19 of the top 25 electric vehicle OEMs, accounting for 61% of the EV market.

On the negative side, BlackBerry's revenue has been declining, falling 14% in fiscal 2021 and 22% in the first nine months of fiscal 2022 due to supply chain challenges and disruptions to the automotive market. The company is facing competitive headwinds in the cybersecurity market and is posting ongoing losses in a challenging macroeconomic environment.

Analysts expect BlackBerry's revenue to decline 20% in the full year with a net loss of $196 million. They expect revenue to rise 11% in fiscal 2024 but with a wider net loss of $228 million.

BlackBerry's stock has a mixed outlook. Some analysts rate it as a hold or accumulate, while others give it a buy rating. It is currently trading below its 52-week high of $5.75 and has a market capitalization of $1.464 billion as of June 28, 2024.

So, should you invest in BlackBerry right now? It depends on your risk appetite and investment strategy. The stock could be a good bet if you believe in the company's long-term prospects in the cybersecurity and connected auto markets. However, it is important to do your own research and consult with a financial advisor before making any investment decisions.

BlackBerry's stock price history and future predictions

BlackBerry Limited (BB) has had a volatile stock price history, with its share price fluctuating significantly over the past few years. As of June 28, 2024, the stock closed at $2.48 per share, with a 52-week high of $5.75 and a 52-week low of $2.20. The company has a market capitalization of $1.464 billion as of that date.

Looking at BlackBerry's stock price performance over the shorter term, the stock has experienced a decline of 1.59% in the last 10 trading days, with volume falling by 25 million shares during the last trading day. The stock's price fluctuated 5.39% on that day, ranging from a low of $2.41 to a high of $2.54.

Analysts' predictions for BlackBerry's stock price vary, but overall, the stock is expected to underperform the market in the next few months. Zacks' data indicates that BlackBerry is currently rated as a Zacks Rank 3, suggesting inline returns relative to the market in the short term. Additionally, BlackBerry has a VGM Score of C, indicating that it may be overvalued. The stock holds a buy signal from the short-term Moving Average but a general sell signal from the long-term average.

Despite the mixed signals, there are several reasons why investors may consider BlackBerry stock compelling. BlackBerry has transformed its business from a market-leading smartphone maker to a top cybersecurity company, with solutions that address more than 96% of cyber threats. The global cybersecurity market is forecasted to grow, and BlackBerry, with its government contracts and access to G7 and G20 members, is well-positioned to benefit from this industry-wide growth. Additionally, 19 of the top 25 electric vehicle OEMs use BlackBerry's QNX operating system, capturing 61% of the EV market.

However, BlackBerry's revenue has been impacted by the pandemic and supply chain challenges, with a 14% decline in fiscal 2021 and a 22% drop in the first nine months of fiscal 2022. Analysts expect a net loss for the company in the near term, with revenue expected to decline by 20% to $718 million for the full year.

In summary, while BlackBerry's stock price has been volatile and the company faces challenges, its position in the cybersecurity and EV markets may offer potential for growth. However, analysts predict a decline in revenue and net losses in the near term, making the stock a hold or accumulate candidate for investors.

The company's cybersecurity business

BlackBerry's cybersecurity business is driven by Cylance AI, which offers world-class security outcomes to organizations of all sizes. The company's cybersecurity solutions address more than 96% of cyber threats and are trusted by several governments, including seven of the G7 and 18 of the G20 members.

BlackBerry's cybersecurity consulting services provide an endpoint-to-endpoint approach to protecting organizations. The company's consultants assess vulnerabilities in infrastructure, devices, and configurations using penetration testing, social engineering techniques, and physical security assessments. They also offer digital forensic services to help organizations understand exploited vulnerabilities and provide data recovery and media analysis in the event of a cybersecurity breach.

BlackBerry's cybersecurity products include CylancePROTECT, CylanceOPTICS, cyber threat intelligence (CTI), and CylancePROTECT Mobile modules. These solutions are designed to stop up to 25% more malware and deliver higher efficacy ratings while using less CPU utilization compared to other solutions.

BlackBerry's cybersecurity revenue growth has been impacted by the pandemic and supply chain challenges, which disrupted the automotive market's shipments of new connected vehicles. However, the company continues to expand its cybersecurity services into connected cars and integrate its QNX operating system with Amazon Web Services (AWS) through its IVY platform.

The company's connected vehicles business

BlackBerry's connected vehicles business is a significant part of the company's operations. The company's QNX software is embedded in millions of vehicles worldwide, with the number increasing over the years. As of June 2023, BlackBerry's QNX software was embedded in over 235 million vehicles, according to TechInsights, a leading technology analysis and market research firm. This represented a year-over-year increase of 20 million.

BlackBerry's QNX software is trusted and used by many leading automotive OEMs and Tier 1 suppliers. These include well-known brands such as BMW, Bosch, Continental, Honda, Mercedes-Benz, Toyota, Volkswagen, and Volvo. The software is utilised in various automotive systems, including advanced driver assistance, digital instrument clusters, connectivity modules, hands-free functionality, and infotainment systems.

BlackBerry's QNX software is also integrated into the Cockpit Domain Controller (CDC) of Mahindra & Mahindra's XUV700 SUV, marking a significant expansion into the Indian automotive market. Additionally, BlackBerry extended its partnership with L-SPARK to boost the development of connected vehicle technology innovation for Canada-based technology companies.

The company has also inked a multi-year agreement with BMW Group to develop next-generation technology for their vehicles. As part of the deal, BlackBerry will assign a team of engineers to support the development of new SAE Level 2/2+ driving automation functions and license its QNX technology to the BMW Group.

BlackBerry's connected vehicles business is well-positioned to benefit from the increasing software-defined nature of modern vehicles. The company's software solutions are foundational for the vehicles of today and tomorrow, playing a critical role in the development of smart cities and the advancement of autonomous and connected vehicles.

BlackBerry's QNX operating system

The QNX operating system is used in a wide range of industries, including automotive, robotics and automation, medical devices, rail systems, heavy machinery, industrial control systems, and aerospace and defence. In the automotive industry, it supports applications such as digital cockpits, advanced driver assistance systems (ADAS), instrument clusters, acoustics, and infotainment.

The QNX operating system provides a full-featured development platform with a deterministic RTOS, safety certifications, and POSIX compliance. It helps embedded developers increase reliability, shorten time-to-market, and reduce development costs. The latest version, QNX Software Development Platform (SDP) 8.0, was released in May 2023 and is designed to enable automakers and IoT systems developers to deliver more powerful products at lower costs while maintaining high standards of safety, security, and reliability.

The QNX operating system is a key component of BlackBerry's strategy to focus on cybersecurity and Internet of Things (IoT) businesses. It continues to score new design wins for QNX and is integrated with Amazon Web Services (AWS) in vehicles through the development of IVY. BlackBerry also offers security services, including secure over-the-air updates, and safety services to help customers achieve various certifications such as IEC 61508, ISO 26262, IEC 62304, and EN 5012X.

The company's financial health

BlackBerry Limited (BB) is a leading player in enterprise mobility management, widely recognised for its productivity and security innovations. The company has transformed its business from a market-leading, and then failing, smartphone maker to a software and services provider. It now offers endpoint management and protection to enterprises, specialising in regulated industries like the government, as well as embedded software to the automotive, medical, and industrial markets.

BlackBerry's revenue rose 15% in fiscal 2020, largely due to its acquisition of the cybersecurity firm Cylance. However, in fiscal 2021, revenue declined by 14% as the company struggled with the impact of the pandemic on the automotive market and the lapping of its acquisition of Cylance. In the first nine months of fiscal 2022, revenue fell 22% year-over-year as supply chain challenges disrupted the automotive market's recovery. Analysts expect a further 20% decline in revenue for the full year, with a net loss of $196 million. However, for fiscal 2024, a narrower decline of 11% is expected, with revenue projected to reach $797 million.

BlackBerry has a current net cash position of $407 million. Its gross margin TTM is 59.09%, with an operating margin of -10.11% and a net profit margin of -68.47%. The company's quick ratio MRQ is 0.77, and its current ratio MRQ is 0.89.

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