Beleaguered tech giant BlackBerry Ltd (NASDAQ:BBRY) is looking to create a niche for itself by focusing on software that runs computer systems on cars. But is that enough to drive BBRY stock 80% higher in 24 months as stated by noted short-seller Andrew Left?
Left, the founder of Citron Research, recently equated BlackBerry to Nvidia Corporation (NASDAQ:NVDA) — the high-flying graphic chip company that is now paving a future in autonomous driving, artificial intelligence and datacenter technology.
As such, Left believes BlackBerry’s emergence with QNX — its vehicle infotainment system software — should be evaluated much higher than the company’s legacy hardware/software businesses.
BlackBerry Shifting Gears With QNX
“BBRY has virtually completed its transition from hardware to software, cut expenses so it no longer burns cash, secured its balance sheet,” Left contends. Adding “When Wall Street shifts its frame of expectations toward the future, and gets over their legacy business, watch out.”
To its credit, the Canadian company has survived the smartphone onslaught from Apple Inc. (NASDAQ:AAPL) and Samsung Electronics (OTCMKTS:SSNLF) and, as Left pointed out, BlackBerry is finally making money in a much quicker time than expected, which speaks to the leadership capabilities of CEO John Chen. Plus, the company still has a sizable position not only in the enterprise market, but also in certain developing nations. But $20 per share, or an 81% jump from current levels seems a bit farfetched.
QNX Is Not Alone
Not to mention, there are still tons of deficits BlackBerry must address. While QNX is quickly being embraced by auto manufactures, so are competing platforms from Apple and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) subsidiary Google.
Both CarPlay and Android are not only widely popular, they also have a significant lead on QNX. Google last month announced the deployment of its Android Automotive initiative. Google, which dominated the phone market by licensing Android to OEMs, has already secured deals with Audi and Volvo to bring a car-focused version of Android to market.
Reports suggests that both Audi and Volvo will build Google’s version of car Android into “their next generation” of cars. This seems like a credible threat to BlackBerry, particularly given Google’s lead in mapping technology (Google Maps/Waze), which it can leverage to scale its car infotainment system ambitions.
Meanwhile, Apple’s CarPlay gives drivers a way of applying their iPhone software to the car. CarPlay allows drivers to send messages with iMessage, play music, get directions, listen to podcasts, stream radio and call people — without ever touching their iPhone.
Heavily powered by Siri voice commands, CarPlay makes it so drivers can keep their eyes on the road, not on the phone’s tiny screen. There are currently some 24 different car makers that support CarPlay, with a total of 114 car models offering CarPlay support. Can BlackBerry stock compete with that?
Bottom Line for BBRY Stock
To be sure, these facts are not lost on Citron Research. Left contends that both “Google and Apple are both known to be maneuvering to build an operating system for autonomous vehicles.” Left also acknowledged that Tesla Inc (NASDAQ:TSLA) might also want in on the action. On the positive side, BlackBerry — unlike in previous years — appears to know where it’s going. But just as in previous years, the company is facing tough competition, which makes it even tougher to pinpoint the value of BBRY stock.
Still, after years of gloom around the name, there is now reason to be optimistic about the company, given that it is now a credible name in a growing market. But while I won’t rush to endorse a $20 target, there’s nonetheless a case to be made that BlackBerry could be an acquisition target with QNX. From around $11 per share, I expect BBRY stock to reach $13 to $15 by the end of the year.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
