BlackBerry (BBRY) has had a rough go of things in the last five years or so.
While Google (GOOG) Android is still king and Apple (AAPL) continues to dominate with its iPhone, BBRY stock has crumbled over 85% since 2009 and BlackBerry market share has eroded to a mere 2.3% in the U.S. — behind even Microsoft (MSFT) and its Windows phones.
But BBRY stock has, admittedly, done pretty well as of late. Shares of BlackBerry are up more than 36% year-to-date in 2014 and BBRY stock has roughly doubled from 52-week lows in January.
But where BlackBerry goes from here still is an open question — and a lot is riding on its new Passport phone.
BBRY Stock Has Much Riding on Passport
Joanna Stern over at the Wall Street Journal recently reviewed the new square-shaped Passport from BBRY. She is correct in her take that BlackBerry needs to win over people like her — former “CrackBerry” addicts who fell in love with the company’s gadgets 10 years ago but eventually had to switch to a more modern smartphone simply because the BBRY models couldn’t cut it.
Sadly, the new Passport phone doesn’t convince her.
Stern calls the design — centered around a gimmicky square screen — “awkward” and says the screen “makes the phone top heavy when you type on it.” Furthermore, the simplified keyboard actually moves some lesser-used keys to the touchscreen and leaves other in physical form — a weird hybrid, in her opinion, of the tactile keys that made BlackBerry phones and BBRY stock so popular in its heyday. As she says…
“I liken it to coming home to find your living room is now your bedroom and your bedroom is your bathroom.”
Now, this is just one review. But it’s pretty compelling, and reinforces other notions that are swirling out there about BBRY stock — namely, that the company simply can’t hang anymore when it comes to gadgets.
This is not to say that BlackBerry will disappear if the Passport is a flop. However, if the company remains a software and services name without the hardware … well, its future is quite different and it faces a heck of a lot of serious competition from companies like Microsoft that also plan to dominate enterprise software.
Is BBRY Stock a Buy?
I would be reluctant to buy BlackBerry after this run, mostly because the negativity seems to be mounting around the Passport and there could be plenty of ugly headlines acting as an anchor on BBRY stock in the weeks ahead.
There are some attractive parts of the business still, notably its secure messaging platform that is increasingly attractive in the wake of the Facebook (FB) purchase of WhatsApp for about $19 billion and talk about secure messaging service Snapchat being valued at more than $10 billion.
However, investors have to be realistic about the current state of things. Even after last year’s deep layoffs at BlackBerry, BBRY stock still is in deep trouble as revenue craters and the company continues to operate at a deep loss.
Sure, BBRY still has about $1.7 billion in cash on the books — about a third of its entire market value. However, it’s not unreasonable to ask what more BlackBerry has going on, and how long that cash can stay at current levels as the company continues to operate in the red.
My advice: If you are sitting pretty on a big gain in BBRY stock, sell out now and take your profits off the table. The future is not bright for this embattled tech stock.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.