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

The price of Blackberry stock is going down for the fourth consecutive day this morning as it is sliding nearly 2% at $10.6 per share while shares of the former smartphone manufacturer, now turned into a cybersecurity company, have shed 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 that is estimated to be worth €530 billion by 2030.

Moreover, in that same month, the Cybersecurity & Infrastructure Security Agency (CISA) issued a warning about a vulnerability in one of the old versions of the company’s QNX Real-Time Operating System that could compromise the functioning of “highly sensitive systems” powered by this solution.

However, the agency stated that it had no information about incidents involving the exploitation of this vulnerability.

Could the price of Blackberry continue to drop despite the absence of catalysts that explain this latest downtick?

In the following article, we take a closer look at the price action while also providing some insights about the firm’s historical financial performance to outline plausible scenarios for the future.

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Blackberry Stock – Technical Analysis

The price of Blackberry stock bounced off a long-dated lower trend line on 20 August and this move was followed by two pronounced upticks that were accompanied by above-average trading volumes.

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

The stock’s latest price action has formed a symmetrical triangle pattern that could break in any direction as this formation is typically considered directionally unbiased – meaning that it is not bullish or bearish per se.

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

Until that break happens, the most plausible prediction for BB stock is that the price action may soon tag the lower trend line for the fourth time, resulting in an 8.5% downside risk.

Blackberry will participate in the upcoming Jefferies Software Conference that is scheduled to take place on 14 September. Further news about the deployment of the company’s recently launched vehicle-based payment solution may affect its price action.

Blackberry Stock – Fundamental Analysis

Revenues of Blackberry have been dropping steadily in the past four years, moving from $1.3 billion back in 2017 to $893 million last year.

Meanwhile, gross profit margins have been declining but have remained above 70% during that same period. That said, the firm has failed to swing to positive operating profitability while its GAAP net income has been quite volatile moving from a $1.2 billion net loss in 2017 to positive territory in the two subsequent years to then fall to another pronounced $1.1 billion loss last year.

The success of the company’s pivot toward cybersecurity after selling its once-successful smartphone unit is still in question and, although progress has been made, it remains to be seen if Blackberry’s management team will manage to steer the company to positive profitability in the future.

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

At its current market capitalization of $6.9 billion, the firm is being valued at 8.1 times its forecasted sales for the next twelve months.

Since Blackberry’s top assets are primarily intangibles (patents, trademarks, and other intellectual property), its current valuation makes it a potentially attractive target for an acquisition considering the positive momentum that the cybersecurity space is experiencing.

In that scenario, the stock may offer some upside to buy-and-hold investors but other than that, if the company remains an independent venture, its valuation seems fairly stretched considering its deteriorated fundamentals and uncertain future.

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