BlackBerry (NYSE:BB) was among the companies caught up in the Reddit-fueled trading frenzy. Its share quadrupled after a mention on the now-famous r/WallStreetBets forum. Like GameStop (NYSE:GME), BB stock was heavily shorted in the retail investor vs. hedge fund wars.
While the rally has died down considerably since then, many investors are left wondering if BB is still a strong buy. Does the company have fundamental value or is its price just the result of the trading wars? Here’s a look at BlackBerry’s long-term growth potential.
BB Stock Gets Caught Up in the Trading Frenzy
Before we look at BB’s long-term tailwinds, let’s take a look at how we got here. After GameStop’s wild ride, Redditors soon turned their focus to other small companies that Wall Street was betting against. Among these was the namesake phone maker, BlackBerry. In an effort to take on the hedge funds, investors went on a buying spree of the company’s stock. This in turn spurred more activity from Wall Street traders who were forced to invest in the stock to cover their short positions.
As a result, BlackBerry stock prices went sky-high. In just four weeks, the company saw its value quadruple as Robinhood investors squeezed the big guys. However, the rally quickly came to an end when Robinhood restricted the purchase of certain stocks (BB being one of them).
Just like that, BlackBerry’s rally ended just as quickly as it started. In a single day, it lost a fifth of its market value. This created major turmoil in the investing community as a once-beloved trading platform came under fire (the restriction has been lifted since then).
Nevertheless, with BlackBerry’s prices back to earth (but still not as low as its pre-Reddit days), many investors are wondering if the stock is a good bet right now. The short answer: yes. This is because short-term stock movements shouldn’t matter too much if you’re in it for the long game. On that front, I would say BB stock has a lot going for it and is a steal at its current price.
What’s In Store For BlackBerry?
BlackBerry’s rally last month is entirely a result of the Reddit community’s trading activity. However, an artificially induced rally, like the one we saw, also highlights the fundamental value of a stock.
BlackBerry is the perfect example of this. While the company is known for being the pioneer of smartphones, in recent years, it has made the silent transition from hardware to software. With its cutting-edge technology and new partnerships, BB stock is well-poised for big gains in the future.
The first of many tailwinds for the company is its partnership with Amazon (NASDAQ:AMZN). The two companies will be working together to create technology for connected vehicles. BlackBerry is expected to create a product that will enhance the analytics and big data needs of the vehicle. A partnership with a tech juggernaut like Amazon will certainly push BB stock higher — but this could take a while.
BlackBerry’s second growth opportunity is in the hardware space. The company will be creating a headset with Foxconn Technologies which will cater to the 5G era. As reported by Seeking Alpha, it will include a keyboard, camera and 5G connectivity. The product is still in its early stages and new details are expected to emerge soon.
Going off Apple’s (NASDAQ:AAPL) Airpod success, a headset that caters to the 5G era will certainly be a gamechanger for BlackBerry.
The Bottom Line
BlackBerry isn’t your classic comeback story but the company definitely has a lot going for it. The transition from hardware to software is likely to pay off for the company in the coming years. While I can’t say for sure when these potential gains will come into fruition, I will say that BB stock is a steal at its current price.
Adding to this, BB stock may also see a further pullback from its Reddit-fueled rally. But if you’re willing to play the long game and hold on to the stock for a couple of years, there are plenty of upsides ahead. The company’s new products and partnerships hint at a brighter future.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.
