The corporate world has many examples of businesses that couldn’t evolve with the times and, despite being industry leaders, got lost to obscurity just because they didn’t change fast enough. Blockbuster is one example. At one time, it used to have over 9,000 stores, making it one of the largest movie and rental services in the U.S. by far. Now there isn’t a single company-owned store remaining in the entire country.
A similar thing happened to Waterloo-based BlackBerry (TSX:BB)(NYSE:BB), which went from being one of the most trusted and well-known names in the cell phone industry to a small software company. At its peak in 2007, the stock used to trade for well over $230 per share. Its current valuation is less than one-seventeenth of its glory day’s valuation.
But investors might have reason to believe that BlackBerry could go to the moon again.
The recent Reddit-fueled spike
In the latter half of January 2021, the company saw its stock price rise to $17 a share for the first time since 2018. There have been precious few occasions like this in the last nine years. And even that rally wasn’t fueled by something that the company itself had done. It was instead instigated by an internet group of retail investors that motivated people to start buying BlackBerry in droves.
While the rally died down as quickly as it started, it gave BlackBerry investors some real hope for the first time in several years. Investors got to see that the stock might still have some potential for growth left, and it might make an amazing long-term recovery stock.
BlackBerry has rebranded itself as a software company that specializes in cybersecurity and tracking. Safety and security were the prized features of BlackBerry devices. But the company couldn’t translate that relatively well into its software products and couldn’t carve a place for itself in the cybersecurity market as it did in the cell phone market.
Still, BlackBerry lingers on, and it hasn’t given up on its cell phones as well. An India-based mobile company called Onward-Mobility has partnered with BlackBerry to create phones with its characteristic features and branding, and these phones will support 5G.
It might not be BlackBerry’s way back into the smartphone industry as a major player, and it might also not be the trigger that shoots the BlackBerry stock through the roof. What is likely to make BlackBerry great again is some of its software products gaining more traction in the market and establishing BlackBerry as a major contender in the cybersecurity sphere.
2020 was the first year in the last nine years when BlackBerry’s revenue actually grew compared to last year. It might not be much, but it’s a step in the right direction. After 2020 and the cybersecurity issues that arose due to widespread remote working and the pandemic, more companies will start to beef up their online security, and BlackBerry might start gaining some real traction and growth.
Speaking of BlackBerry stock’s potential...
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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.
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and BlackBerry.