The Reddit frenzy has been hogging the media limelight of late. As wildly popular subreddit WallStreetBets (WSB) continues to grow in subscribers, so too does its collective purchasing power.
Today, r/wallstreetbets has 8.8 million subscribers and counting.
Many folks on the forum aren’t just looking to make a quick buck over the shortest timeframe possible; they’re quite angry at the big money on Wall Street. And they’re more than willing to take on excessive amounts of risk to bring the pressure to the big-league shorts.
For or against the Reddit forum WallStreetBets?
Simply put, the days of easy money in short-selling are over.
The risks involved with betting against even the worst of stocks have skyrocketed. And if you think the folks at WSB are finished, you may be in for an unpleasant surprise if you’re thinking about going short any company. Betting against the crowd at WSB is a reckless endeavour that could be detrimental to your wealth. At the same time, joining the herd probably isn’t a good idea unless you understand that you’re speculating, not investing.
We’re all about long-term investing at the Motley Fool, not speculating to make a quick buck. But if you are enticed by the action on Reddit’s WSB channel, I think there is one stock that I’d be willing to give the green light for. As you may have guessed, that stock is BlackBerry (TSX:BB)(NYSE:BB).
Is the frenzy at BlackBerry over?
BlackBerry shares have had more than their fair share of booms and busts over the last several months. Euphoric good news stories followed back vicious sell-offs have become the norm for shareholders of BlackBerry.
The folks at WSB have given the shorts at BlackBerry a bit of a squeeze back in January. Today, the stock has shed around 45% of its value and is a compelling “buy the dip” opportunity for longer-term thinkers in a company that could prove to be one of Canada’s biggest turnaround stories of all-time.
While there’s no telling if all the hungry speculators have been taken out of the stock, which still sits up over 106% year-to-date, I view the stock as the least speculative stock that’s made WSB’s radar while shares are at $17 and change.
Unlike the other short-squeeze opportunities on WSB’s hit list, BlackBerry actually has a lot going for it. The collaboration with Amazon.com Web Services (AWS) is exciting, the QNX business will finally be looking up as COVID-19 pressures wane, and the stock still isn’t nearly as expensive as most of its peers based out of Silicon Valley.
After the latest +50% plunge, BB stock trades at 7.7x sales. That’s not a high price to pay for a firm that’s heavily involved in the cybersecurity scene. While I’ve often referred to BlackBerry as a difficult turnaround stock to evaluate, given all the moving parts and acquisitions that have been made over the years. This difficulty in valuing the stock, I believe, was a top reason why I thought BB stock was a gem that was hiding in plain sight.
While I have no idea what BlackBerry’s next move will be over the short-term, I’d look to initiate a quarter position today, with the intention of buying more on a further pullback. And if WSB bids up the stock again, I’d look to either hold or trim the name to make a quick profit. BlackBerry stock is a turnaround story that’s worth hanging onto for years, if not decades at a time, whether or not it’s in the spotlight of Main Street.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Joey Frenette has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. 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.