BlackBerry (TSX:BB) Stock Rallies Once More!

BlackBerry (TSX:BB)(NYSE:BB) stock is rallying once again. Is it still a buy at these prices?

| More on:

BlackBerry (TSX:BB)(NYSE:BB) stock is rallying once again. Up 17% over the last month, it has risen in tandem with its fellow meme stocks AMC and GameStop. At this point, it’s pretty clear that Reddit-beloved stocks tend to move in unison. Price moves in AMC and GME are highly correlated, BB slightly less so. Generally, when the “big name” meme stocks are posting huge gains, BlackBerry tends to go up slightly less while following the same basic pattern. This past month’s moves are consistent with that, as we’ve seen BB rise about half as much as GME and AMC in the same period.

So, we have a pretty good idea of what’s going on here. Redditors are getting bullish on meme stocks again, and BlackBerry is benefitting from the trend. The question is whether this is all there is to the story, or whether there is something more going on here.

What’s behind the rally?

To understand why BlackBerry is rallying, we need to look at the features it shares in common with other meme stocks that are rising this Summer. To simply say that these stocks are correlated isn’t much of an answer: we need to know why the same investors are drawn to them.

One thing that BlackBerry has in common with other meme stocks is high short interest. According to MarketBeat, 6.5% of BB’s shares are sold short, meaning that a sudden rush by shorts to cover their positions would noticeably boost the price. That may be part of the reason why Redditors are enamoured with BlackBerry.

As for fundamentals, it’s doubtful that they explain what’s going on. The company’s most recent earnings were lukewarm, beating on revenue and in-line on EPS. Here were the standout metrics:

  • Revenue: $174 million
  • Gross margin: 66%
  • Adjusted diluted EPS: -$0.05
  • GAAP diluted EPS: -$0.11

The gross margin is pretty encouraging, but ultimately, we’ve still got BlackBerry losing money here. This situation could easily turn around as BlackBerry racks up more big lucrative enterprise contracts, like the one it recently scored with China’s WM Motor, but it’s hard to say whether they will be forthcoming.

Can it continue?

Now that we’ve seen some possible explanations for BlackBerry’s recent rally, it’s time to answer the question: Can it continue?

My own best guess is that it could but that any rallies like the recent one will be short-lived. BlackBerry has gone on many short-lived rallies this year only to come down to its previous range of $10-$11 later. It seems like the meme stockholders have less long-term conviction in this play than they do in AMC or GME. BlackBerry is only a bit player on WallStreetBets compared to the superstars AMC and GameStop. So, it’s less likely that this stock will rally as hard as its American counterparts, barring some unforeseen circumstances like a huge earnings beat.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry.

More on Tech Stocks

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Tech Stocks

Best Tech Stocks for Canadian Investors in the New Year

Three tech stocks are the best options for Canadians investing in the high-growth sector.

Read more »

doctor uses telehealth
Tech Stocks

What to Know About Canadian Small-Cap Stocks for 2025

Small cap stocks are a great way to experience outsized gains. Here is what you need to know about small…

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

A Top-Performing U.S. Stock That Canadian Investors Really Should Own

Canadian investors should buy and hold this top performing U.S. stock for generating significant returns in the long run.

Read more »

dividends grow over time
Tech Stocks

Got $1,500? 2 Tech Stocks to Buy and Hold Forever

Two tech stocks with high-growth potential are sound prospects for long-term investors.

Read more »

Soundhound AI is a leader in voice recognition software
Tech Stocks

3 Tech Stocks I’m Looking to Buy in January

From tech stocks with consistent growth histories to stocks experiencing a temporary bullish momentum, there are multiple attractive options in…

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Tech Stocks

Take Full Advantage of Your TFSA: Growth Strategies for 2025

Maximize your TFSA in 2025 with proven growth strategies. Learn how to build a tax-free portfolio, avoid common mistakes, and…

Read more »

up arrow on wooden blocks
Tech Stocks

1 Soaring Stock I’d Buy Now With No Hesitation

Although it's from a rapidly evolving discipline and carries unique risks, the robotics stock's growth potential is too formidable and…

Read more »

Biotech stocks
Tech Stocks

Digital Healthcare Boom: 2 TSX Stocks Transforming Canadian Medicine

Even though telehealth stocks carry the risk factor of the tech sector and other innovative stocks, the profit margin can…

Read more »