After coming crashing to the floor only a decade ago, BlackBerry (TSX:BB)(NYSE:BB) is finally on investors’ minds again. The company has ditched its mobile phone production and is focusing on a completely new path.
That has many wondering, “What will the next decade look like?”
Today, we’re going to deep dive into this company’s future at a turning point that has many investors both excited and terrified about the future of this stock. Trading at under $10, with an all-time high near $130 per share, it’s definitely worth a look.
The new opportunity
BlackBerry achieved success before because it saw an opportunity and took advantage of it. Cellphones were personal items, and BlackBerry wanted people to have a personal phone, creating ways to express yourself through something that was really only meant for communication purposes.
But as the iPhone and others took over, BlackBerry’s unique design became cumbersome, leaving the company gasping for air after a share price drop of almost 150% in just a few short months.
So, what’s changed?
BlackBerry has seen another opportunity, one that it can piggyback off of its old expertise: cybersecurity. With internet and data all becoming so easily accessible, people need products that can guarantee their information is kept safe. Artificial intelligence, autonomous cars, even just daily use of the internet all provide future ways for people to be hacked.
That’s where BlackBerry comes in, looking to these areas and more as ways to guarantee security against our changing world. Of course, it isn’t the only company looking into these areas. In fact, the stock recently was hit over concern about a competitor that overshadowed the stock’s financial results, which were ahead of analyst estimates.
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To quell these worries, BlackBerry has a number of areas it’s focusing on. As I’ve mentioned, these include artificial intelligence, autonomous vehicles, and cybersecurity. It’s this last key factor that has been really moving the company forward, with its acquisition of security specialist Cylance already proving a good investment.
In its most recent quarterly results, Cylance contributed $51 million and $32 million in non-GAAP and GAAP revenue, respectively, with software and services revenue increasing 35% year over year. CEO John Chen said this was ahead of schedule and only feeds into more long-term growth for the company.
Beyond Cylance, BlackBerry’s QNX automotive software solutions were also up, now in 150 million cars from 120 million a year ago. This could increase even further if an expanded partnership with LG Electronics goes through. All this news made Chen and management optimistic that expected growth would be between 23% and 27% year over year
Over the next decade, I believe there is still room for growth for BlackBerry. Investors are still wary as this company is losing money due to acquisitions and reinvestment; however, over the long term, the company has proven it can bring in revenue that will see it become profitable sooner as opposed to later.
I’m not going to sit here and say we’ll see those $137 share prices we saw the decade before, but I can say with a certain amount of confidence that in the next five years, the stock’s share price should double, and in the next five that price should double yet again.
This comes from the belief that our future needs companies like BlackBerry, and BlackBerry has chosen a field where it’s good at what it does, without depending on trends. Artificial intelligence and autonomous vehicles may be new, but they’re here. These are no longer fictional investments, but real projects that need BlackBerry for protection.
For investors willing to wait it out, this stock remains completely undervalued and could see your investment grow by leaps and bounds over the next decade.
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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of BlackBerry. BlackBerry is a recommendation of Stock Advisor Canada.