BlackBerry (TSX:BB) has been through a rough patch in recent years, with its stock down 28% year to date in 2024 and trading at $3.38 per share on the Toronto Stock Exchange. Despite a market cap of just $2 billion, BlackBerry remains a well-known name with an innovative legacy. While the company has struggled to keep pace with the broader market, underperforming the TSX Composite for three consecutive years, it continues to make strides in high-growth areas like cybersecurity and IoT technology. For long-term investors, this dip might actually represent an overlooked opportunity, in my opinion.
In this article, I’ll highlight why BlackBerry stock’s current valuation could be a big bargain and why, in a few years, you might regret not owning a piece of this top Canadian tech icon.
Strengthening cybersecurity and IoT segments
As artificial intelligence (AI) continues to emerge as a game changer, BlackBerry’s cybersecurity segment has strengthened its portfolio with Cylance AI-driven threat detection. This is an emerging area where it has expanded significantly over the past two years. As private and public organizations face a big surge in cybersecurity risks in the coming years, BlackBerry’s proactive stance in AI for threat prevention is likely to attract more clients.
In the IoT (Internet of Things) segment, BlackBerry continues to maintain a strong position in the automotive technology market with the dominance of its QNX software, which is currently used in more than 255 million vehicles globally. The company is increasingly capitalizing on the software-defined vehicle trend, where vehicles are evolving to become more software-centric.
Improving financials
Despite its stock’s underperformance in recent years, BlackBerry’s latest earnings report and strategic updates clearly reflect how the company has been striving to realign itself with market demands.
Notably, the company achieved a remarkable milestone in the second quarter (ended in August 2024) of its fiscal year 2025 by posting breakeven adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and adjusted earnings per share.
For the second quarter, BlackBerry’s performance exceeded market expectations in several areas as it posted revenue of US$145 million, up 9.9% from a year ago, with the help of double-digit growth in both the IoT and cybersecurity segments. Its IoT segment generated $55 million, reflecting a 12% year-over-year increase, while the cybersecurity division brought in $87 million, marking a 10% increase.
The company’s strong performance in these areas showcases its ability to adapt and grow in sectors where demand is rising. Although the company plans to separate its cybersecurity and IoT divisions in the future, this planned strategic move could unlock value by allowing each independent business unit to focus more on its core market opportunities.
You might regret not owning BlackBerry stock
Clearly, BlackBerry is continuing to see fundamental improvements as it focuses on strategic expansion. While BlackBerry stock has struggled in recent years, its strategic shifts and strong performance in emerging markets suggest that this could be one of the most overlooked Canadian tech stocks right now.
As the company continues to make efforts in the high-growth areas of IoT and cybersecurity, long-term investors who recognize BlackBerry stock’s potential now could expect to see significant returns down the line.
