Meme Stocks Are Dropping: Time to Buy BlackBerry

BlackBerry’s (TSX:BB)(NYSE:BB) meme stock status may be gone, but its growth catalysts aren’t.

| More on:

Image source: Getty Images

In the past few months, BlackBerry (TSX:BB)(NYSE:BB) has consistently been in the news for several reasons.

Indeed, BlackBerry is a company that has been branded as a meme stock. This has been both a blessing and a curse for the company of late, as it’s sold off along with any company not named GameStop or AMC Entertainment.

Currently, BlackBerry looks poised to open tomorrow around $8.50 per share, according to after-hours trading. That would amount to a full 70% decline from its peak in late January.

That said, there’s an interesting underlying thesis with BlackBerry. It’s still got an intriguing growth story. Indeed, looking past the company’s recent parabolic rise and fall, BlackBerry does have some major catalysts on its side.

Here’s why I think BlackBerry could be one of the few meme stocks worth considering today.

Key growth catalysts provide strong investment thesis

Generally, what puts off conservative investors with meme stocks is the sensitivity these companies have to social media hype over their fundamental performance. Indeed, most seasoned investors know the rapid rise in these stocks wasn’t natural. They’re bound to fall back to earth. However, at these levels, an argument could be made that BlackBerry has taken enough of a beating from the market.

This past year, BlackBerry made headlines for entering  a transformative deal with Amazon. This deal sent this stock buzzing, and retail investors followed in suit. Additionally, a patent dispute resolution in January with Facebook further added momentum to its stock price. This set retail and Reddit-savvy investors in a frenzy and pushed the stock price to its 52-week high.

However, after BlackBerry’s recent correction, the stock is now trading at what I view as an attractive price. This has created a unique opportunity for bullish growth investors to take advantage of a much better entry point on this stock, with the same underlying thesis.

Yes, more downside could be on the horizon. However, timing the bottom with any stock that’s in decline is difficult to do. I find phasing in an investment over time is the best way to get exposure for those who think there’s more downside risk on the horizon.

Bottom line

This retail-driven frenzy in meme stocks has created quite the spectacle of late.

On the one hand, it can be easy to dismiss the noise and move on with our day without ever considering touching stocks like BlackBerry.

On the other hand, this frenzy provides an opportunity to assess what factors took these stocks to these levels in the first place.

Indeed, I think the fundamental drivers behind BlackBerry are sound. Accordingly, this is a stock I’d definitely consider right now.

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. Fool contributor Chris MacDonald has no position in any of the stocks mentioned. David Gardner owns shares of Amazon, Facebook, and GameStop. Tom Gardner owns shares of Facebook. The Motley Fool owns shares of and recommends Amazon 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.

More on Tech Stocks