BlackBerry (TSX:BB) Stock: Revenue Falls Short During Patent Sales

BlackBerry could be approaching oversold territory, making it an excellent long-term investment after its ongoing pullback.

| More on:
Watch for the Warning Signs Stock Market Prices Trends 3d Illustration

Image source: Getty Images

Have you been keeping an eye on the shares of BlackBerry (TSX:BB)(NYSE:BB)?

The former smartphone manufacturing giant is under considerable pressure once again after releasing its latest earnings report. At writing, BlackBerry is trading for $10.77 per share, and it is down 65.80% from its valuation on January 27, 2021, peak. If you were one of the investors who bet big on BlackBerry during the bull run caused by r/WallStreetBets, you might have taken a major hit.

The latest quarterly decline is another one of many oddities we have witnessed during the pandemic. Even some of the most patient long-term investors who own BlackBerry stock might be considering selling off their shares in the company.

As BlackBerry continues to drag its feet again, is it time to move on from the stock, or is it worth buying for the long run? Let’s discuss.

BlackBerry on the decline — once again

Many investors managed to profit off of the stock at the start of the year. However, if you missed the chance to take the profits and run with your capital elsewhere, it might not be a good idea to sell your shares in the company, unless you can bear the considerable losses.

Unlike most other companies in the WallStreetBet hit list, BlackBerry has promising fundamentals that offer some backing to its higher valuation. The former smartphone manufacturer shifted its focus to enterprise software. It will be a mistake to give up on the stock right now if you are a long-term investor.

If you hold the stock with a short-term horizon, BlackBerry might not be worth your while. BlackBerry shares are well below the 2021 peak, but it is still trading for much higher than last year. There is a risk of greater downside for the stock over the near term. If volatility does not scare you and you can practice patience, BlackBerry could be a great bargain once it begins recovering in the coming years.

BlackBerry posts loss in revenues this quarter

BlackBerry’s latest quarterly results fell short of expectations. Its expected revenues for the quarter called for $247 million, and the company pulled in $215 million. The top-line miss for the stock was partially due to the loss of licensing revenues amid patent sales. The software and services segment also fell just below expectations, citing modest weakness across the board for the company.

BlackBerry also stated that it is entering negotiations to sell some of its patents, particularly the ones related to mobile devices, messaging, and wireless technology. The company’s patent portfolio could be worth $1 billion. RBC Capital Markets stated in a recent note that the current valuation for the stock could reflect the estimated value of its patents already.

Between RBC Capital Markets and other analysts, BlackBerry stock has either a sell or a hold rating across the board.

Foolish takeaway

Is BlackBerry stock worth buying at its current price? I would prefer to wait for the price to pullback to half of its current value. It is possible for the stock to decline further, considering the near-term volatility anticipated in the stock market right now.

Not many investors are betting big on the name right now. BlackBerry still has to show more meaningful evidence of organic growth. If you are keen on BlackBerry and do not mind the short-term volatility, the tech stock could be a worthwhile addition to your investment portfolio 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.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and BlackBerry.

More on Dividend Stocks