BlackBerry Ltd.: Here’s What to Do After the ~13% Post-Earnings Surge

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) surged 12.75% on Thursday following the release of its fiscal Q2 2018 results, which surprised to the upside for both the top and bottom lines, thanks in part to patent licensing wins and strength from its IPs.

Own BlackBerry for the long term. Don’t trade it from quarter to quarter

Although the quarter was very impressive, it’s important for investors to take a long-term approach. Remember what happened the last time BlackBerry had this much hype? Shares surged, but when the hype faded, many short-term thinkers ended up throwing in the towel.

You shouldn’t trade in and out of BlackBerry based on a quarter-to-quarter basis. That’s a sure way to lose a tonne of money over the short term. BlackBerry has evolved into a software developer, and I believe the company will gradually start to rebound, but let’s be realistic — it’s going to take a lot more than a few months to form a sustainable rally to higher levels.

If you really want to get in on BlackBerry and its turnaround story, accumulate shares incrementally, preferably on dips, and pay no attention to the volatile ups and downs that the stock may have. If you buy when there’s a tonne of hype and sell along with the herd, you won’t be doing yourself any favours. You’ll just be making your broker rich!

BlackBerry Technology Solutions (BTS): something to be positive about

BTS remained relatively flat year over year, but QNX is set to be a major driver of growth going forward as more opportunities arise from the self-driving car industry.

As you may have heard, BlackBerry won a deal with Delphi, which will use QNX in its autonomous driving platform. QNX will play a major role in Delphi’s turnkey self-driving system, which will be sold to automakers in 2019 and will be in 2021 car models. BlackBerry’s secure operating system will defend against cyber-attacks and malware, which is of utmost importance in a time when major breaches occur on a regular basis.

While no system will ever be 100% secure and unhackable, BlackBerry has shown that it’s one of the “harder-to-hack” systems out there thanks to the company’s focus on security, which I believe will give it a slight edge over competitors in the autonomous car space. You don’t want anybody hacking into your car, after all. The consequences could be horrifying!

Bottom line

The turnaround at BlackBerry is for real; however, investors are going to need to be patient with the company in order to realize major long-term gains. The company has a great deal of net cash ($1.9 billion), which could be used for either acquisitions or organic growth initiatives.

QNX is a game-changing technology, and I believe BlackBerry will make major waves in the auto space over the next few years.

If you’re a value conscious growth investor, then take advantage of the volatility in BB shares. Buy shares on major dips, and ride it out over the next few years. You’ll thank yourself later.

Stay smart. Stay hungry. Stay Foolish.

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Fool contributor Joey Frenette has no position in any stocks mentioned.


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