Citron Research Is Bullish on BlackBerry Ltd.: Time to Load Up?

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) soared again following positive news released by Citron Research. Should you buy today?

| More on:

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) soared nearly 8% in a single trading session following news that Andrew Left of Citron Research is bullish on the hardware maker turned software developer.

BlackBerry is looking more attractive by the day for investors looking for a rebound candidate. The positive headlines continue to flow in, and it’s possible that the rally could continue.

The hardware business was cutthroat, and BlackBerry got crushed, but it has turned a corner by becoming a software business while it lends its brand name to its hardware developing partners for royalties on device sales.

It’s clear why Prem Watsa owns such a huge stake in BlackBerry. The company’s new business model is much more sustainable, and it appears the management team has steered the company back on track.

Game-changing tech could make BlackBerry a takeover target

If you’re a shareholder, you probably don’t want the infamous short-seller Citron Research to be making the headlines by talking about the company you’ve invested in. A plunge in share price usually follows statements made by the firm, but this time Citron had a bullish tone.

BlackBerry’s QNX secure software, which is used in the auto industry, is cited as being a potential “game changer” for self-driving cars. Citron then stated that BlackBerry could be a very attractive buyout target. Andrew Left stated, “if they start focusing on the QNX business, or if they start focusing on the Internet of Things business, they can get higher multiples and the stock will move faster than the actual numbers would move.”

In previous pieces, I mentioned that the QNX project could make BlackBerry great again. QNX is one of the most secure operating systems out there, and it’s becoming a hotter product by the day as the number of cyber-security threats continue to rise. QNX was originally a mobile operating system, but it’s now embedded in autonomous cars. QNX is a promising technology that could play a major part in the autonomous cars of the future.

Does this mean you should load up on shares?

I would never recommend buying shares of a company just because you’re looking to ride the upside of a potential buyout. This is pure speculation, and if a buyout doesn’t happen, you could potentially dump your shares at a loss.

I believe BlackBerry is a terrific contrarian play for long-term investors who are looking for a rebound play, but you shouldn’t pay too much attention to potential buyers. You should buy the stock only if you’re going to hang on to shares regardless of whether a buyout happens or not. If I owned shares of a wonderful business with a durable competitive advantage, I’d actually be upset if a buyout happened, even though shares would surge.

BlackBerry remains one of the most promising rebound plays in the market today, and if you’re all right with huge amounts of volatility, you should probably pick up shares today.

Stay smart. Stay hungry. Stay Foolish.

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 Joey Frenette has no position in any stocks mentioned.

More on Investing