BlackBerry Stock Is up 80%? Is it a Buy or a Sell?

BlackBerry stock has surged 80% in the last two months. Is it a target of a short sale or fundamentals are driving the stock?

| More on:
Investor wonders if it's safe to buy stocks now

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BlackBerry (TSX:BB) stock jumped 80% in two months, from November 21, 2024, to January 21, 2025. Was there any big announcement that could justify this jump? There were:

  • Rebranding of QNX software
  • Sale of Cylance endpoint security business to Arctic Wolf 
  • Better-than-expected third-quarter earnings

Analysts upgraded their price target on BlackBerry to US$3.5-$4. Note that BlackBerry stock trades on both NYSE and TSX. The price target is for the stock trading on the NYSE, and it has already surpassed the target with an 80% jump.

Is BlackBerry stock’s 80% jump a sign of a short sale?

However, an 80% jump in two months, with just one to two days of high trading volumes, hints at a short sale. BlackBerry stock saw a 7.1% increase in short interest between December 15 and 30. Around 5.1% of BlackBerry’s shares are short-sold. The stock price has ballooned to $5.89, probably because of the short sale interest.

Created with Highcharts 11.4.3BlackBerry PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

If you purchased the stock below $4, now is a good time to sell it rather than wait for the turnaround. And if you have been holding the stock since January 2021, with a short-sale peak of $17.86, it is better to sell the stock and cut your losses.

Why am I bearish on BlackBerry stock?

I have turned bearish on Blackberry stock as the new management has not yet generated revenue growth. Although the company did report positive free cash flow and reduced its operating expenses, the company needs a revenue push in a highly competitive market. Having a great product is not enough if people are not buying it. The push towards sales and marketing is important. 

Turning to the four points we summarized at the start of the article, let’s analyze their potential to generate revenue.

Rebranding of BlackBerry’s QNX software

BlackBerry’s QNX software is a real-time operating system that powers critical embedded systems. The biggest sector for QNX is automotive. However, the company has been expanding QNX’s application to medical devices, industrial controls, transportation, heavy machinery, and robotics, among others.

The company relaunched the QNX brand to boost recognition and reinforce its leadership within the automotive and general embedded industries. CIBC analysts believe that improved brand recognition could help the company grow credibility. It remains to be seen if it can convert the recognition into hard sales.

If you remember, the company built US$815 million in QNX royalty backlog, almost 3.8 times its FY24 revenue. The company secured product design wins from top automakers. The design stage fetches some revenue. However, the royalty revenue comes when the car with the QNX software is produced and sold.

In the third-quarter earnings presentation, the management gave an estimate of how this $815 million backlog will be realized. Around 33% (US$268 million) is expected to be realized between FY25 and FY27, 39% (US$318 million) between FY28 and FY30, and 28% (US$228 million) beyond 2030.

Even if we consider a 50% realization of the $268 million royalty revenue in FY26, that is a 58% jump from the $230 million in guided revenue from IoT (Internet of Things) for FY25.

Sale of Cylance

BlackBerry is selling its endpoint security business to Arctic Wolf for a cash consideration of US$120 million, of which US$80 million will be paid immediately and approximately US$40 million a year following the closing. This offloading will remove approximately US$90 million from annual revenue and $93 million from operating expenses. This could help BlackBerry focus on profitable businesses and improve profitability.

Better-than-expected earnings

BlackBerry’s third-quarter revenue of $162 million surpassed analysts’ expectations of $146.68 million. However, its FY25 revenue guidance of US$517-526 million fell short of estimates.

The 80% rally has valued BlackBerry stock at 3.8 times its sales per share. If BlackBerry maintains its annual revenue of US$687 million, it will take 3.8 years to return $5.89 in sales per share. If the QNX royalty backlog does not materialize, BlackBerry stock could fall again.

Should you buy or sell BlackBerry stock?

While BlackBerry’s cash flow is improving, it is too early to buy the stock unless there is visible revenue growth. You could consider buying Bombardier, which is enjoying revenue growth.

Should you invest $1,000 in BlackBerry right now?

Before you buy stock in BlackBerry, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BlackBerry wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »