For better or for worse, 2016 was the year of the comeback. We saw it in sports, when the Chicago Cubs clawed back three down in the World Series to emerge victorious. In the markets, embattled companies like Micron Technology, Inc. (NASDAQ:MU) and Advanced Micro Devices, Inc. (NASDAQ:AMD) responded in unprecedented fashion. And who can forget the stunning rise of Donald Trump (although some are trying to do just that)?
But for all the glorious come-from-behind winners, 2016 produced its fair share of losers. Unfortunately for long-time shareholders, BlackBerry Ltd (NASDAQ:BBRY) falls into the latter category. In fact, BBRY stock is the rarest and most frustrating of losers: Those that hit the retail market first, yet finding themselves as persona non grata just a few years later.
Gone are the days of the “CrackBerry.” Apple Inc. (NASDAQ:AAPL) shocked-and-awed the world with its iPhone concept. For the first time ever, the physical chassis of a portable phone was completely smooth. No miniature keyboard, no unnecessary buttons — it was pure Apple simplicity and ergonomics at its finest. From then on, BBRY stock failed to resonate as a meaningful or relevant investment.
InvestorPlace contributor James Brumley is on point when he compared BBRY to a mortally wounded animal. The former Wall Street darling is “doing anything and everything it can just to stay alive and salvage some value from BlackBerry stock.”
Old School Tech Won’t Save BBRY Stock
Will BlackBerry be successful in its desperate endeavor? By most indications, the prognosis is not good. The most obvious headwind is the competition. Having lost to Apple once, you have to credit BlackBerry for its pugnacious attitude in going for round two. It’s not the aggressiveness I question; rather, it’s the way they’re going about things.
To rival the iPhone, an e-device manufacturer must come up with something extremely compelling and groundbreaking. In short, BBRY must get to the point of near-intimate arousal. Unfortunately, their QWERTY keyboard-armed “KEYone” — do you see what they did there? — smartphone isn’t getting it done.
Listen, I love the QWERTY keyboard something fierce — when it’s attached to an actual computer. But we have to accept the fact that this format just doesn’t work anymore in a smartphone. Yes, I understand that the physical keyboard helps eliminate unintended errors in spelling and grammar. Believe it or not, Millennials are sticklers for proper grammar — or at least they think they are. So segments of QWERTY fans do exist for BBRY stock to advantage.
It’s just that nobody is knocking down the doors for one. Among the top “old tech” smartphones available, they all share a common theme. They are either purpose-built for ruggedness and reliability, or they are marketed on price. This is fine if these QWERTY phones are a minor part of a broader portfolio. But to live or die by them? That’s hard to stomach for even the most ardent BBRY stock investor.
One Glimmer of Hope for BlackBerry Stock
Fundamentally, BlackBerry stock is riddled with holes and miscues. The technical picture is where most investors and traders will consider (or not consider) BBRY. And even here, you have to say the picture looks awful. Shares have been trending bearishly in a sharply declining channel since August of last year.
Little hope exists of a comeback.
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But zoom the chart out a little bit more, and things get interesting. From May of 2015 through the present day, BBRY stock appears to be forming a pennant formation.
This is characterized by a wide variance from peak-to-trough in the initial phase that tightens considerably in the final phase. For example, the high/low variance between May and October of 2015 was around 40%. From September of last year to this current month, the variance for BlackBerry stock is approximately 15%.
As the price range tightens, the “energy” of the markets is condensed to a point where the pressure is released. For BBRY stock, this could either lead to a breakout, or a breakdown. Logically and fundamentally, many would argue for the latter. I, however, can see the case for an upside swing.
BlackBerry stock has been pounded, yet it keeps holding on. This potentially sets up a contrarian trade. BBRY bears may panic out of their short positions, creating further demand for BlackBerry stock.
Here’s the Long and Short of It …
The major caveat is that this trade assumes a very short lifespan. Essentially, it’s about moving in and moving out when the profit has been made. As a mainstay in the portfolio, I’m not confident at all on BBRY stock.
Business miscues can be overlooked temporarily, but they eventually come back to haunt if not corrected. I don’t see BlackBerry doing anything differently other than slapping on a new name to the same game.
The bottom line here is don’t be surprised to see BBRY stock skyrocket over the next few months. If it does, and you happen to have taken the risk, congrats on your boldness! But for goodness sake, please exit with your profits intake while you still have the chance.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
