BlackBerry’s (BBRY) fall from grace is pretty well known at this point. In the last five years, shares have been sliced by 85%. They’re currently worth single digits … yet BlackBerry stock was worth well over $100 back in 2007.
Even zooming in on just 2015, there’s a nearly 20% loss in the books.
It’s almost a new year, though, which serves as an arbitrary yet necessary reminder that what’s past is past. That’s especially true for BlackBerry — especially since the direction of the stock has, in fact, turned during the last three months.
With its large pile of previous struggles perhaps finally in the rearview, I remain confident in BBRY stock looking forward.
The Good for BBRY Stock
I first expressed my bullish position on BlackBerry back in late August, acknowledging the BlackBerry bear case but noting the company’s positive free cash flow, improving diversification away from hardware, narrower loss in its then-most-recent quarter and momentum in the enterprise.
Since that time, BlackBerry stock has gained over 30% — five times as much as the market-leading Nasdaq. As a result, more and more folks seems to be considering the fact that BlackBerry may actually be able to pull off something that, these days, is more rare than a unicorn in the tech world: a turnaround.
That sentiment itself is the cherry on top of the comeback. But first, let’s look at why the masses seem to be catching on to the fact that BlackBerry could be here to stay.
BBRY Stock Surprises, In a Good Way
The main driver — and the one responsible for a 10% one-day pop in BlackBerry shares — is the company’s third-quarter earnings results. While the company posted a loss, that was expected … and red three cents on the financial statement was far less than the 14 cents Wall Street had slated.
Meanwhile, the company’s transformation was evident yet again in the report — as it was in the second-quarter results I cited last go-round. BlackBerry has been transitioning away from hardware, and that move is going strong. In Q3, software and services revenue expanded by 183% year-over-year and 119% quarter-over-quarter … and approximately 70% of that revenue was recurring (read: sustainable).
In Q2, I applauded the company’s 2,600 enterprise customer wins and the Q3 report confirmed that growth, too, looks sustainable. BlackBerry booked more than 2,700 enterprise customer wins in the more recent three-month period.
What About Android
The one thing missing from the report that investors expect to play a key role in the turnaround is the success of the company’s Android phone. There was little indication of how well it’s selling but, as I noted last time, I believe the mere decision to make an Android phone gets things headed in the right direction since the smartphone market — and the app market, specifically — is two-sided.
But more importantly, it’s not the only thing BlackBerry stock is relying on thanks to its move towards the enterprise and software.
As all these puzzle pieces come together, expect BlackBerry stock to continue chugging higher.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
