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BlackBerry Is My Favourite WallStreetBets Stock: But Should You Buy?

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Don’t look now, but BlackBerry (TSX:BB)(NYSE:BB) has been made great again, blasting off over 31% on the back of a meme stock resurgence sparked by incredible upside action at WallStreetBets darling AMC Entertainment.

The unprecedented move in BlackBerry stock came just months after the first WSB-driven boom and bust. Undoubtedly, many investors were left holding the bag after the January surge. Just as the last of the bagholders had jumped ship, telling themselves they’ll never chase meme stocks ever again, BlackBerry stock pops. Will the bagholders return to recoup the losses from their ill-timing of BlackBerry stock’s last surge? Or are they truly done speculating?

My guess is that they’ll be lured back in, as anytime there are quick riches to be made, beginners tend to have the itch to get in, as they lose sight of the risks they’ll bear. Heck, nobody wants to hear of their friends getting rich, especially if they have zero knowledge about investments! As we head into summer, which tends to be a period of thinner trading, I think the WallStreetBets crowd could bring the heat to many beaten-down names.

How high could BlackBerry stock fly?

While I wouldn’t chase BlackBerry after its most remarkable surge since January, count me as unsurprised if the stock managed to break its recent $31 high. The retail army over at WallStreetBets has only grown stronger in these past several months, as most others moved on from the meme stock fiasco.

Not only have the number of so-called degenerates grown (now over 10.3 million strong), but the level of comradery has also likely strengthened.

In a forum where strong-handed investors hold despite negative volatility are praised and weak-handed investors are looked down upon, there really is no telling just how high BlackBerry stock or any other meme stock on their radar can fly.

As such, shorting or buying short-dated put options against any such names is a dangerous endeavour. Of course, going long may also be risky, but if you’re a seasoned trader who knows the rules of the game (get in and get out!) who’s not willing to hold on for dear life when the trade sours, only then do you have my blessing to speculate on BlackBerry stock after its incredible run, which may or may not be the start of something bigger.

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The recent surge in BlackBerry stock may not have been predictable, or could it have?

Just last week, I pounded the table on shares of BlackBerry, stating that the name had hit a massive buy signal:

“While I have no idea when BlackBerry will grow organically to justify analyst upgrades, I do think that now is as good a time as any to be a buyer of shares. The technical picture hasn’t looked this good in quite some time. A continuation wedge pattern appears to be forming. If it comes to fruition, BB stock could be headed over 40% higher from today’s levels of $9 and change,” I wrote in a prior piece.

“I think BB stock is as timely as ever. So, take the doubters with a grain of salt. BlackBerry is ready to run.”

One week later and BlackBerry stock is up over 75%. With real fundamentals backing it, BlackBerry is still my favourite WallStreetBets stock to own for the long term. That said, I question the valuation after the recent move. Simply put, if you proceed by buying shares north of $20, you’ll be joining the likes of many speculators. And over the near term, many will be left holding the bag. Will it be you?

If you're looking for opportunities in this uncertain market, I'd encourage you to consider the following

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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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and BlackBerry.

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