Shares of BlackBerry (TSX:BB)(NYSE:BB) soared over 50% yesterday, as news of a deal with Amazon put the top Canadian tech stock back on the radar for many investors as my top pick for December got off to a great start. The agreement spans multiple years, and through Amazon Web Services, the companies “will provide automakers with the insights, capabilities, agility, and speed they need to thrive in an increasingly connected world.”
The agreement centres on the BlackBerry IVY platform, which reads vehicle sensor data and generates insights from the information that can be stored inside the vehicle and in the cloud. IVY will use BlackBerry’s driving software QNX and take advantage of AWS’s machine learning and Internet of Things capabilities. This could pave the way for many applications that developers can create for vehicles. One of the examples of what IVY can do is help identify icy roads and areas where there’s heavy traffic, and then use that information to make recommendations to the driver. There’s potential for this to help autonomous vehicles as well, and that’s what makes the technology exciting.
Could Tesla potentially partner with BlackBerry?
In a 2015 interview, CEO John Chen mentioned the possibility of working with companies involved in the development of self-driving cars, including Google (which is now part of Alphabet), Tesla, and Apple. And with Tesla coming under scrutiny for its drivers not paying attention and relying too much on the car’s self-driving capabilities, there could be a reason for the two to link up together. One intriguing opportunity that could exist: providing data on distracted driving to Tesla and law enforcement.
It’s not a scenario that may exist right now, but consider that according to BlackBerry, its software could currently help parents receive notifications about the driving behaviours of their teenage children “based on insights from vehicle sensors when the number of passengers in the vehicle changes, when the driver appears to be texting, distracted, or not observing speed limits.” That information could also be immensely valuable to law enforcement or to a company like Tesla, potentially saving its public relations department from many headaches in the event that one of its vehicles is involved in a serious crash, especially when a distracted driver is at fault and where data could provide more context behind an accident.
Why BlackBerry stock still looks poised for more gains
I’m still hanging on to my shares of BlackBerry, because this deal involving Amazon not only adds credibility to the company’s software, but it also helps put it in the spotlight, and that could pave the way for more agreements with other companies in the future. And don’t forget that shares of BlackBerry are still fairly cheap, trading at less than two times their book value, and even with the bump up in price, they are still down 19% from where they were three years ago.
The tech company has finally given investors some great news to rally around, and while it may be tempting to cash out given how poorly the stock has performed in recent years, this is what makes long-term investing worth it, as now is when the stock may finally start on a stronger, much more positive trajectory.