BlackBerry (TSX:BB) is a name that brings back memories of the early smartphone era when its devices were a staple in the business world. Once a leader in mobile technology, it struggled to keep up with the rise of competitor smartphones. Rather than fade into irrelevance, it reinvented itself as a cybersecurity and Internet of Things (IoT) software provider. That transformation, however, has been anything but smooth. Its stock has seen dramatic highs and lows, leaving investors wondering whether the latest dip is an opportunity or a warning sign.
Recent numbers
BlackBerry stock has taken a hit over the last year, dropping significantly from its previous highs. As of writing, it trades at approximately $6.41 per share, well below its peak of $8.86. The decline has been driven by a combination of underwhelming financial results, fierce competition, and concerns about whether the company can fully capitalize on its shift to software. However, recent earnings suggest that BlackBerry stock may finally be finding its footing.
In its latest quarter, BlackBerry stock reported revenue of US$162 million, beating analyst estimates of US$145 million. It also delivered adjusted earnings per share of US$0.02, a welcome surprise compared to the expected loss of US$0.01 per share. These results indicate that despite the challenges, the company is making progress. Notably, BlackBerry stock achieved positive operating and free cash flow for the first time in 12 quarters, generating US$3 million. This is a significant milestone, considering the company has been burning through cash for years as it refocused its business.
Business strength
The strongest growth came from its IoT division, which saw a 13% revenue increase to US$62 million. BlackBerry’s QNX software, which is embedded in millions of vehicles worldwide, has been gaining traction as the automotive industry increasingly relies on connected and autonomous vehicle technology. Automakers need secure, reliable software to power next-generation vehicles, and BlackBerry stock is positioning itself as a key player in that space.
Cybersecurity remains a crucial part of BlackBerry’s business, accounting for US$93 million in revenue last quarter, up 7% from the previous period. The global cybersecurity market is expected to grow rapidly over the next decade as businesses and governments invest heavily in digital security. BlackBerry stock has a solid portfolio of security-focused products, but it faces stiff competition from larger players. To carve out a stronger position, it will need to prove that its artificial intelligence (AI)-driven security solutions can offer a compelling advantage over its rivals.
Value or just cheap?
Despite these positive trends, investors remain cautious. BlackBerry’s transition from hardware to software has been a long and costly process, and the company still isn’t consistently profitable. While it has improved its cash flow, it has yet to demonstrate sustained earnings growth. The company expects to break even in the next quarter, with projected revenue between US$126 million and US$135 million and a minor full-year loss of US$0.01 per share. While this outlook isn’t disastrous, it isn’t exactly exciting either.
So, why consider BlackBerry stock as a buy-the-dip opportunity? One reason is its valuation. The stock is currently trading at a price-to-sales ratio lower than many of its peers in the cybersecurity and IoT industries. If the company can continue growing its software revenue while keeping costs under control, the stock could see a significant rebound.
Another factor is its potential in the automotive market. The QNX platform is already embedded in more than 235 million vehicles, and as automakers shift toward software-defined vehicles, the demand for secure, real-time operating systems will only grow. If BlackBerry stock can further expand its partnerships with major automakers, its IoT division could become the company’s primary growth driver.
Bottom line
For investors looking at BlackBerry stock, the key question is whether it can fully capitalize on the industries it’s targeting. The cybersecurity and IoT markets offer huge opportunities, but BlackBerry needs to execute its strategy effectively to gain a stronger foothold. While its recent earnings suggest progress, it still has work to do before convincing the market that it is on a sustainable growth path.
For now, BlackBerry stock is a company in transition. But if it executes well, today’s dip could be the opportunity that long-term investors have been waiting for.
