BlackBerry stock price has certainly been languishing recently. After hitting highs of more than $15 in early 2018, BlackBerry stock price has lost its steam once again. February’s 14% fall was just more of the same for this highly volatile stock. While there remains much promise, the company continues to struggle to deliver this promise.
Fears of the potential severity of the coronavirus ruled the market in February. This continues today, and as I write this article, I’m struck by the downside we’re seeing.
In the case of BlackBerry, the company has to deal not only with this, but also with high uncertainty. BlackBerry is in an emerging and highly competitive industry.
So why did the BlackBerry stock price fall again in February?
BlackBerry stock price falls on coronavirus fears
The S&P/TSX Composite Index fell more than 6% in February due to coronavirus fears. This action took all stocks with it, with higher risk stocks such as BlackBerry stock being taken even harder. We’re sitting here today in March where we are seeing a continuation of this, albeit in March we have the oil price war that has accentuated this.
So where does this leave BlackBerry stock price? A stock that was already struggling to grow in highly competitive, emerging industries is not looking good in this environment.
BlackBerry stock price falls on company struggles
Today, we’re still waiting to see whether BlackBerry’s transformation will fully succeed. Years ago, BlackBerry was in complete disarray and running out of cash. CEO John Chen’s strategy was to back away from the consumer handset market. A focus on the internet of things and cybersecurity industries followed.
In highly fearful times like we are in today, high-risk stocks with low visibility are not in high demand. BlackBerry is such a stock. The company’s businesses certainly have high growth potential, but we have yet to see concrete evidence of strong, consistent and profitable growth.
The market is in no mood to be patient. Coronavirus fears, economic fears, and a general level of risk aversion means that BlackBerry stock price will suffer.
Yes, BlackBerry’s involvement in the high-growth cybersecurity industry is a good thing. But although the cybersecurity industry is estimated to exceed $300 billion by 2024, it remains in its infancy.
While there is also big growth in the automotive technology industry, this industry is also in its infancy. Industries that are in their infancy are higher risk propositions. For obvious reasons, investors are not currently flocking to higher risk stocks.
Foolish bottom line
Highly volatile times like these are times when truly big price swings happen and opportunities emerge. While the downside in stocks is not over yet, we must stay ready to pounce as opportunities emerge. There will be a time when BlackBerry stock price is so attractive that we should consider adding it.
In closing, I would like to remind Foolish investors of our belief in holding great businesses for the long term. While this belief remains intact, short-term stock price movements often create opportunities to create wealth.
Therefore, we need to blend this long-term focus with an eye for short-term stock mispricings. Only then can we use both strategies in harmony. Our quest for financial freedom can be fulfilled.
