The market is alive lately with the talk of a potential upside to BlackBerry (TSX: BB)(NYSE: BB). Among the claims being made are a potential stock double materializing over the long term. Considering that BlackBerry still trades down over 11% year to date and barely breaks even over the preceding 12-month period, that could be a tall ask.
Let’s try to talk through that opportunity and see if there really is one over the long term.
All hail the king!
BlackBerry was the one-time king of the smartphone crop. Unfortunately, the king has yielded its throne and is no longer in the smartphone business. Instead, BlackBerry licenses out its name to partners who build and then bring to market smartphones with the BlackBerry name. That too is on the decline, as existing partner agreements came to a close, and the last BlackBerry device released was over two years ago.
BlackBerry does have a new hardware partner and may even have a new device coming to market in 2021. A new device doesn’t exactly resonate as a screaming buy, nor does it imply a stock double event. Followers and fans of the stock will point to QNX as the saviour the company still needs.
Perhaps more importantly, BlackBerry has diversified outward from being just another device manufacturer and provides a bevy of software and security-focused products and services. Additionally, many of those service provide a recurring subscription-based revenue stream that the company solely needs. Again, that hardly screams opportunity.
So, where exactly does that opportunity for growth lie, and could it really mean the stock will double?
BlackBerry is finally in the driver’s seat
QNX is BlackBerry’s secure and modular operating system that is in use in a variety of high-risk mission-critical applications. That long list includes everything from medical devices to the automobile infotainment systems. The automobile industry is of particular interest. QNX is already powering the automotive infotainment systems of a growing number of manufacturers. That number is said to be upwards of 150 million vehicles worldwide.
As impressive as that sounds, that isn’t directly where the long-term potential lies. That honour goes toward the growing autonomous driving market. BlackBerry’s QNX is in a unique, if not advantageous position to capitalize on that potential. This is due both to BlackBerry’s existing presence in the automobile sector as well as the company’s renowned security efforts.
That long-term potential got a recent boost. Earlier this month, BlackBerry announced that QNX would be collaborating with Plus — a self-driving technology provider. As part of that collaboration, QNX will be integrated into Plus’s class-eight self-driving trucks.
Will the stock double?
Is BlackBerry a good investment? There’s little reason to doubt that BlackBerry won’t have a lasting and profitable arrangement with the automotive segment. Given the recent announcement with Plus, that opportunity may finally be realizing. Whether or not that potential will translate into some serious growth for BlackBerry.
In my opinion, BlackBerry does have long-term potential as a small addition to a portfolio. Whether or not this implies a stock double is another question that can only be answered in time. In short, it’s no longer whether BlackBerry will get into the autonomous driving market, but more of when.
When BlackBerry does finally make it into that market, and vehicles are on the road, expect the stock to finally take off. What that also means is that depending on your portfolio and timeline, there might be far better options to consider right now.
