Can BlackBerry Execute, or Will it Be Punished by the Market?

A meme stock the market seems to love to talk about right now is BlackBerry (TSX:BB)(NYSE:BB).

This Canadian software company has been one of the most volatile companies on the TSX in recent weeks. Most of this volatility is due to the rise of retail investors on social media sites like Reddit bidding up shares of meme stocks like BlackBerry.

However, there’s another reason I expect volatility on the horizon in the future: execution risk.

Partnership catalyst the key piece of the puzzle

All eyes on BlackBerry right now are focused on the company’s recent partnership with Amazon.com.

This partnership aims at accelerating the development and go-to market strategy of BlackBerry’s Intelligent Vehicle Data program (IVY).

This partnership has a tonne of promise. As I’ve stated before, this is the catalyst BlackBerry investors have been looking for. Indeed, any sort of growth opportunity such as the one afforded by this partnership should be cheered by the markets. And it has.

Execution risk a big factor for BlackBerry

However, right now, the big risk with BlackBerry stock is related to execution risk. The company will have to execute on its existing partnerships and make good on investor expectations.

Thus far, there’s not a lot of credence being given to this stock by the market. This is because investors have seen a slow and steady decline over the years on the top line. Accordingly, for growth investors, the proof is in the pudding. BlackBerry will need to step up and perform.

Can the company do so?

I believe it can. Indeed, BlackBerry’s management team has done a good job of transitioning the company away from its original hardware business to become a pure-play software company. This has been a multi-year transition, and all things considered, has gone smoothly. This Amazon partnership provides objective validation of BlackBerry’s software products. I think it’s a game changer for long-term shareholders for sure.

Conclusion

It’s typically the case with tech companies like BlackBerry that the proof is in the pudding. Investors in this sector today are demanding growth more than ever. Until BlackBerry turns the corner and shows some results, it’s likely to see some softness on the horizon.

Having great intellectual property and a rock-solid business model is great. Unfortunately, investors want to see this bear fruit in the form of growing cash flows and profits.

I think BlackBerry is well positioned to make this happen. However, this is still a story stock. There’s good reason to believe BlackBerry could trend down toward last year’s levels if performance doesn’t meet the market’s expectations.

Accordingly, I’m on the sidelines with respect to this name right now. I think it will take a few quarters of watching this stock and seeing if its performance improves to make a more informed investment decision on BlackBerry.

Like high-growth tech stocks? Check out this company we’ve found that could be the NEXT Shopify!

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting…
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago – before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

More reading

  • Build a 5G Portfolio: 3 Canadian Stocks to Buy Right Now
  • 3 Top TSX Stocks That Will Turn Green Into Gold
  • Forget BlackBerry Stock: 2 Top Tech Stocks to Buy Instead!
  • ON SALE! Buy This 1 Cheap Artificial Intelligence Stock That Just Fell 20% Today
  • 4 Undervalued Canadian Stocks to Buy Right Now

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Chris MacDonald has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.

The post Can BlackBerry Execute, or Will it Be Punished by the Market? appeared first on The Motley Fool Canada.

Trade the News!

Seize the market opportunities!
Start trading with a reliable broker.
Let an expert help you get started!

The Motley Fool Canada


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *