The shares of BlackBerry (TSX: BB)(NYSE: BB) saw a massive sell-off yesterday, as they fell by 7.2%. It brought its month-to-date losses to 20%. Yesterday’s sell-off in BlackBerry stock came after a Canaccord Genuity analyst cut his ratings on the stock.
Before I tell you why the recent sell-off in BlackBerry stock reminds me of Tesla (NASDAQ: TSLA) skeptics, let’s take a closer look at what Canaccord’s analyst says about BlackBerry.
Image source: Getty Images
Canaccord recommends Selling BlackBerry stock
Canaccord Genuity is a Vancouver-based financial services firm that makes its revenue from wealth management and capital markets segments. Its analyst Michael Walkley yesterday raised his price target on BlackBerry stock to $10 from $8 per share. However, the analyst cut his rating on the stock to “Sell” from “Hold.”
Walkley expects a gradual recovery in BlackBerry’s software and services segments. Overall, he apparently had many positive things to say about the company’s improving growth on many fronts in his note. But he believes its stock price has now risen much higher than his expectations due to a targeted short squeeze.
Why it reminds me of Tesla stock
If you’re not new to the stock market, you probably already know the surprisingly amazing power Street analysts possess. If an analyst suddenly decides to change their ratings on a company, it could trigger a massive sell-off in its stock — without any significant change in its fundamentals or future growth potential.
Elon Musk-led Tesla has been targeted by several skeptics, bears, short-sellers, and analysts for years. Let me quickly share the details of an interesting related incident with you. In May 2019, Tesla was continuing to ramp up its vehicle production to turn profitable. Tesla’s stock price was trading near US$200 per share at the time (before its 2020 stock split). Suddenly, reports from various skeptics and bear analysts started making headlines. Morgan Stanley analysts cut their worst-case target for Tesla stock to just US$10 per share — from US$97 earlier. That month, Tesla stock tanked by 22%.
However, such negative reports and opinions didn’t change what Tesla was trying to achieve. That’s why Tesla stock has risen by over 2,000% since May 2019.
BlackBerry stock is absurdly cheap
BlackBerry has emerged as a big name in the enterprise security software segment in the last few years. The company has also stepped up its efforts to look beyond the North American and European markets. Even if I don’t talk about its other segments, for the time being, BlackBerry’s rising bets to gains from electric vehicle (EV) and autonomous vehicle technology could be enough to trigger a long-term rally in its stock.
Exponentially rising demand for electric and autonomous cars has attracted tech giants such as Apple (NASDAQ: AAPL) in recent years. Apple has secretly been working on its electric and autonomous car project for years. The iPhone is continuing to poach many engineers and auto industry experts from other companies — including Tesla — to work on the Apple Car project. This clearly suggests that large companies — including automakers and tech firms — consider EVs and smart mobility as one of the key growth areas.
BlackBerry already has the edge over the competition when it comes to its offerings for the auto industry. Moreover, the company is also continuing to innovate and develop better technology to expand its auto industry offerings — especially for smart mobility and EVs.
Foolish takeaway
I agree the recent targeted short-squeeze episode made BlackBerry stock extremely volatile. However, you can’t blame Reddit trading mania for all its 2021 gains. By doing so, you’ll completely ignore BB’s recently increased efforts to benefit from the EV and autonomous car revolution. While high volatility made its stock risky for short-term investors, it shouldn’t restrict its long-term stock rally. That’s why you may want to add this cheap EV stock to your portfolio before it starts rallying again.
