The Motley Fool

February Outlook: Why BlackBerry Stock More Than Doubled in January

Image source: Getty Images.

The shares of Canadian tech firm BlackBerry (TSX:BB)(NYSE:BB) ended January with 113% gains. It became one of the most-talked-about TSX stocks last month with a sudden rise in its volatility and trading volume. While the company announced some major updates last month, the Reddit trading frenzy also played an important role in its rally.

Let’s take a quick look at BlackBerry’s key recent updates before we discuss its February outlook.

BlackBerry: January updates

BlackBerry stock has been on my stock watch list for the last few months, as its rising stakes in the electric vehicle and smart mobility segments caught my eyes. The company has been a major player in the auto industry in the last few years. Its QNX real-time operating system (OS) platform is already very popular among large carmakers.

Last month, BlackBerry expanded its partnership with the Chinese search engine giant Baidu. Under this strategic expanded partnership, Baidu’s high-definition maps would run on BB’s latest QNX Neutrino OS. Moreover, these maps and OS would be used in GAC Group’s upcoming mass-produced electric vehicles.

GAC Group — which currently has partnerships with major global auto companies like Honda, Fiat, Toyota, Isuzu, and Mitsubishi — is one of the key automakers in the world’s largest automobile market. I believe BlackBerry’s rising footprints in the Chinese market would help drive big financial growth in the coming years.

BlackBerry also settled its years-long intellectual property rights infringement disputes with the American social media giant Facebook in January. The company hasn’t provided any further details on the settlement so far, though.

The Reddit-fueled rally

Apart from these positive factors, BlackBerry became one of a few discussed stocks on the Reddit community WallStreetBets last month. Some experts blamed WallStreetBets — the subreddit — for fueling an irrational rally in some heavily shorted stocks like GameStop, BlackBerry, and Bed Bath & Beyond, etcetera.

That’s why, when some brokerage firms like Robinhood and Interactive Brokers restricted users from buying some rallying stocks — including BlackBerry — they fell sharply.

BlackBerry stock: February outlook

The impact of the Reddit-fueled stock market saga on BlackBerry stock is difficult to ignore. The stock’s volatility has massively increased lately — making it a risky stock to touch for now. Nonetheless, it remains a good long-term buy due to its efforts to benefit from surging electric cars demand.

Its partnership with Amazon Web Services — announced in December — is also in line with BlackBerry’s effort to raise bets on the smart mobility and electric vehicle revolution. This partnership would allow BB to develop an integrated vehicle data platform that would expand its auto industry offerings.

Foolish takeaway

While these factors won’t result in immediate financial gains for the company, they would certainly boost its revenue and profits in the coming years. That’s why BlackBerry stock is a great stock for investors eyeing long-term growth, as I said earlier. However, its extremely high volatility may continue in February as the Reddit users continue to influence its stock price movement. And that’s what makes its stock risky for short-term investors and traders.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Amazon, Baidu, Facebook, and GameStop. Tom Gardner owns shares of Baidu and Facebook. The Motley Fool owns shares of and recommends Amazon, Baidu, and Facebook. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.