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Meme Stock Update: What’s in Store for BlackBerry Stock This Week?

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As far as the most-discussed meme stocks go, BlackBerry (TSX:BB)(NYSE:BB) is right up near the top of the list.

Indeed, this Canadian software stock has found its way into the mainstream of late. Retail investors betting on a short squeeze with BlackBerry took this stock on a wild ride to $36 earlier this year. Since then, shares have collapsed back down toward the $10 level for the better part of the past month.

In recent days, however, the short-squeeze trade is back on. This stock surged to a high of more than $24 on Thursday, before settling down to close the week at $16.74.

What’s in store for BlackBerry stock this week? Let’s take a look.

Short squeeze is possible, but retail investors need to keep showing up

The interesting thing with most meme stocks out there is, it looks like the squeeze hasn’t happened yet.

That’s to say the data shows that shorts haven’t really covered as much as investors would like to think. Thus, the potential for a short squeeze remains on the table.

Indeed, short interest remains sky high for stocks like BlackBerry right now. There are plenty of other traders, hedge funds, and those looking to make a quick buck to take the other side of this trade. Accordingly, the rapid rise in meme stocks seems to be attributed to heavy retail investor buying volume.

Now, if this heavy buying can continue, all indications are that BlackBerry’s rapid ascent could continue. After all, with so much heavy buying volume, retail investors have shown the power of what coordinated buying from millions of individuals do. If BlackBerry can stay in the spotlight, and if enough retail investors show up to support the cause, this could indeed continue higher.

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Risks do exist, so trade carefully

However, the key risk to BlackBerry stock right now appears to be the probability that retail investors take their profits and walk away from this trade.

For many out there, I think there’s some believability that they’ll hold to the bitter end. The concept of “diamond hands” in the meme investing community has been proven to be successful.

Accordingly, a high enough percentage of “apes” (as they affectionately call themselves) need to hold onto BlackBerry stock with diamond hands. If they don’t, a rapid downside move like the one we saw in late January/early February could be on tap for investors.

Should retail buying decelerate, the heavy amount of short selling and put volume with BlackBerry could tip the scales in the other direction. Retail traders need to be aware of these risks before jumping in.

Bottom line

I’ve commented in the past on why I view BlackBerry as a growth stock with great value around the $10 level. At these levels, the company’s stock price is becoming detached from its fundamentals.

That said, this meme stock movement is independent of traditional fundamental stock analysis. Accordingly, where BlackBerry goes from here remains to be seen.

Investors will want to keep a close eye on how buying volume materializes over the coming week. I believe BlackBerry is a stock that could move 50% higher or lower easily this week. Indeed, options contracts are pricing in this sort of volatility right now.

Like this high-risk, high-reward play? Here are some other stocks with excellent long-term growth potential:

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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 Chris MacDonald has no position in any stocks mentioned in this article. The Motley Fool recommends BlackBerry.

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