BlackBerry (TSX:BB)(NYSE:BB) is a stock that makes its investors doubt if it is worth parking their money in. This doubt comes because people still view it as the 2007 smartphone leader that got gobbled up by Apple’s iPhone. It’s not their fault for having this perception, because BlackBerry didn’t quite market its latest cybersecurity products. The way stocks behave these days, if they market themselves well, investors will put their money in them.
How much did BlackBerry investors earn last year?
When I checked BlackBerry stock’s capital appreciation, it has surged 63% in the last 12 months. In dollar terms, if you had invested $1,000 in BlackBerry in May 2020, you would now have over $1,600 in your account. This growth excludes the bump Redditors created in the stock price graph in January. This 63% surge is also not due to the pandemic or because of strong fundamentals. BlackBerry’s revenue fell 14% in fiscal 2021 ended February 2021.
That got me curious. I looked into BlackBerry’s products and their application instead of the company’s fundamentals. A turnaround story like BlackBerry’s begins with the product roadmap and not the income statement. BlackBerry is leading its turnaround with Spark, QNX, and IVY platforms.
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Spark is artificial intelligence (AI)-based endpoint security solutions. There is a whole suite of unified endpoint security and management solutions. What do they do? If you have been working from home, you might see your work platform asking you to validate your identity. Or when you log in to your Service Canada account, there are some security steps. All this is endpoint security.
As everything goes digital, your device from which you access the internet needs protection. Today, only smartphones and PCs need security. But the proliferation of the internet of things (IoT) devices like biometrics, security cameras, drones, semi and fully autonomous cars, and droids will only increase the chances of cyber attack. The security standards will become more stringent with mission-critical applications.
BlackBerry is a leader in mobile communications. Many governments, financial services, and healthcare companies worldwide use some of the Spark solutions. While it is not a market leader in endpoint security, it has won the trust of governments, making its products sticky.
In the fourth-quarter earnings call, BlackBerry CEO John Chen stated that the company has a strong order pipeline for its new Spark Suite and the Cyber Suite, which will launch in May and October, respectively. These orders could see strong revenue growth in the second half of fiscal 2022.
BlackBerry’s next growth will come from QNX, which is designed for industries such as automotive, medical, industrial automation, but its key vertical is automotive. Many know QNX as an operating system, but it also offers middleware, development tools, and professional services for embedded systems. This means the QNX serves the entire automotive supply chain from chip suppliers to original equipment manufacturers (OEMs).
At present, the QNX install base is 175 million vehicles. In the fiscal fourth quarter alone, QNX secured 25 design wins (nine in auto and 16 in the general embedded market). These design wins will materialize into revenue as automotive production picks up.
BlackBerry is expanding into the vehicle data market with its IVY platform expected to release in October and ship in February 2022. IVY will collect data from the car and supply it to third parties like insurance companies, repair shops, electric charging stations.
Vehicle data is growing as companies try to commercialize autonomous vehicle (AV). The basis of AI is data. A McKinsey report estimates the total addressable market of vehicle data analytics to be US$450-US$750 billion per year by 2030.
The market has attracted attention from names like Microsoft, Google, and Ford, increasing fear of competition for BlackBerry. But John Chen sees it as an opportunity to partner with them. IVY is not just an operating system but also hardware and a cloud-based solution.
BlackBerry has a strong products roadmap that is gaining traction. It has the potential to compete and once again makes its mark. But it will take three to five years to become the next Advanced Micro Devices.
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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.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Puja Tayal has no position in any of the stocks mentioned. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple.