BlackBerry (TSX:BB) Scores a Brand-New Deal

Recently, BlackBerry (TSX:BB)(NYSE:BB) inked a deal with Chinese automaker WM Motor.

| More on:
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

BlackBerry (TSX:BB)(NYSE:BB) stock has seen better days. After reaching a high of $32 in the meme stock craze of January and February, it fell below $10. Earlier in the year, BB became one of Reddit’s favourite stocks, which led to it being heavily promoted along with other meme plays. The hype inevitably died off, which sent BlackBerry tumbling back to earth.

That’s too bad, because the company actually put out some good news recently. After signing a new deal with a Chinese automaker, BlackBerry is making strides in getting its QNX software more widely adopted. In this article, I’ll explore the recent deal and what it could mean for BlackBerry.

WM Motor

WM Motor is a private Chinese automaker that chose BlackBerry’s QNX operating system for a new line of SUVs. QNX Neutrino is a car OS that handles the essential functionality of a car’s user interface. It includes basics like graphics, device inputs, video capture and fonts. On top of these features, car manufacturers and developers can build the specific apps they want.

WM is using this OS in its W6 line of SUVs. These are AI-powered cars that can perform parking maneuvers without human input. In a statement, WM touted BlackBerry’s “safety, cybersecurity and reliability” among the reasons for its choice.

What is this company all about?

WM Motor is an electric car company based in China. Its founder, Freeman Shen, was previously chair of Volvo. It currently has two smart, long range, battery-powered cars in production. Its first model, the EX5, was launched in 2018. It quickly went on to sell more than 30,000 units. While VM Motor is not a publicly traded company, it is among China’s best-funded and fastest-growing EV startups.

Why does it matter?

BlackBerry’s partnership with WM matters because it positions BlackBerry nicely in the EV space. EV is a massive growth industry, expected to grow at 40% CAGR from 2020 to 2027. The auto industry as a whole has been growing at just 4.6% per year over the past 70 years. Growth has been even slower over the past decade.

Electric vehicles are the next big thing in cars. According to a study by Boston Consulting Group, EV sales will overtake gas powered car sales by 2030. If that prediction comes true, then companies like WM Motor could grow dramatically. In such a scenario, BlackBerry’s deal with WM Motor could drive significant growth in revenue and earnings.

Lately, BlackBerry has been making big strides toward re-inventing itself as a software company. The “aura” of failure as a smartphone maker still haunts the company, but its software business is seeing some success. In its most recent quarter, BlackBerry delivered $215 million in total revenue, $165 million in software revenue, a 73% gross margin, $0.03 in diluted EPS, and $51 million in cash from operations. The company’s pivot away from smartphones and toward software has delivered results. Now, with a new deal under its belt, the company might grow even further from here.

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 Andrew Button has no position in any of the stocks mentioned.    

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »