Will WallStreetBets Push BlackBerry (TSX:BB) Stock to Moon?

BlackBerry (TSX:BB)(NYSE:BB) shares are up nearly 100% this year, but the reasons for the rise are complicated. It’s not too late for you to profit.

| More on:
Question marks in a pile

Image source: Getty Images

BlackBerry (TSX:BB)(NYSE:BB) stock is soaring. This year, shares are up nearly 100%. But the reasons for the rise are complicated.

On the surface, this stock is rising for good reason.

“If I had to pick any stock that could rise 10 times in value this year, it would be BlackBerry,” I wrote in early January. “If BlackBerry stock rose 1,000% in 2021, it would still trade at a healthy discount to its peer group. This isn’t even factoring in any organic growth, which could surprise analysts over the next 12 months as its end markets start to gain traction.”

Shares are rising for exactly those reasons, but there’s also a secret tailwind: the Reddit group WallStreetBets.

You should know WallStreetBets

You may have heard of WallStreetBets, the group behind the infamous GameStop stock surge. The group is now a global phenomenon.

“The group WallStreetBets is a longstanding subreddit channel where over 3.5 million Reddit users discuss highly speculative trading ideas and strategies,” explained CoinDesk, adding that “the community has caused huge disruption to financial markets.”

It really is that simple. Internet users aggregate online, share ideas, and funnel their combined power into investments. Sometimes those ideas are value-based; others rely on technical analysis or momentum trading. In any case, the group has proven a force to be reckoned with, nearly destroying several hedge funds in January alone.

BlackBerry is the group’s latest target.

BlackBerry stock went on steroids

WallStreetBets applied the same methodology to BlackBerry that it used to pump the stock of GameStop. Specifically, the group targeted companies with high short interest.

If highly shorted stocks rise in value, many of those short-sellers are forced to cover their position. That requires buying the shares back, sending the price even higher. The result is what analysts call a short squeeze.

“BlackBerry is a stock which has had a high level of short interest in recent years. Accordingly, investors focused on squeezing short-sellers have targeted BlackBerry,” explained Fool contributor Chris MacDonald.

But this isn’t just a momentum play. When I called the company my top idea for 2021, I was referencing the businesses strong underlying fundamentals. Shares have long-term catalysts that could keep the rise going for years to come.

Should you buy this stock now?

It’s never easy to time the market. Ray Dalio has likened it to playing poker with the best. What you can do, however, is place long-term bets on businesses that are likely to be worth significantly more in the future. What happens in the interim shouldn’t be much concern to you.

BlackBerry isn’t a phone company anymore. Today, sales are driven by its cybersecurity software portfolio, which protects next-gen devices like autonomous vehicles, IoT, and more. The world is getting more connected, and BlackBerry is securing those endpoints.

Compared to other cybersecurity stocks, like CrowdStrike, BlackBerry still trades at a 70% discount. And that’s after the recent surge.

In the wake of the WallStreetBets pump, BB shares could remain very volatile, but it’s still an ideal holding for patient investors playing the long game.

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.

Tom Gardner owns shares of CrowdStrike Holdings, Inc. The Motley Fool owns shares of and recommends CrowdStrike Holdings, Inc. The Motley Fool recommends BlackBerry and BlackBerry. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »