BlackBerry (TSX:BB) continues to be among the top-performing tech stocks in Canada in 2023, as it has already risen by a solid 38.5% to currently trade at $6.11 per share, outperforming the broader market by a huge margin. By comparison, the TSX Composite Index has seen 4.6% year-to-date gains.
Before we discuss what could be next for BB stock, let’s take a closer look at some key factors that have fueled its rally this year so far.
BlackBerry stock: Key drivers in 2023 so far
After witnessing a massive crash in 2022, most beaten-down tech stocks have recovered sharply in 2023, as diminishing possibilities of aggressive interest rate hikes attracted renewed buying. This tech sector-wide recovery could be the first main reason why BlackBerry stock has rallied this year so far after losing nearly 63% of its value last year.
BlackBerry’s increasing efforts to expand its presence in the automotive technology sector could be another reason for helping it regain investors’ confidence lately. For example, in January, the Chinese auto giant Dongfeng Motor selected BlackBerry IVY intelligent vehicle data platform-based digital cockpit for its next-generation electric vehicle. While this was BlackBerry’s first IVY design win, it clearly reflects the company’s increasing efforts to grow its footprint in the world’s largest car market, which could help it accelerate its financial growth trend significantly in the future.
The Waterloo-based tech firm also expects to make its IVY platform generally available in May 2023. These developments are also among the fundamental factors driving BlackBerry stock higher lately.
Better-than-expected quarterly results
On March 30, BlackBerry announced financial results for the fourth quarter of its fiscal year 2023 (ended in February). Its quarterly revenue slipped by 18.4% year over year to US$151 million due mainly to a sharp 28% decline in its cybersecurity software revenue due to the challenging macroeconomic environment and cost-cutting across the tech sector. Nonetheless, the revenue for its IoT (internet of things) segment continued to grow positively.
In the February quarter, BlackBerry posted an adjusted net loss of US$13 million — much narrower compared to Street analysts’ expectations of an US$18.8 billion loss. Overall, its better-than-expected results were the reason why BB stock rocketed by 14.4% on March 31, a day after its quarterly results came out.
What’s next for BB stock?
In its fourth-quarter earnings conference call, BlackBerry’s management highlighted that the tech firm will remain focused on achieving profitable growth and turning cash flow positive in the fiscal year 2024 (started in March). As the demand for its automotive industry-focused technological solutions grows in the coming years, I expect the IoT segment to become a major contributor to BlackBerry’s top-line growth and profit margin expansion.
While BB stock has already gone up by slightly less than 40% gains in 2023, it still has seen nearly 27% value erosion in the last year despite its consistently improving long-term growth outlook. Given that, growth investors may want to consider buying it right now to hold for years to come, as it has the potential to multiply your invested money fast.
