Despite the Rapid Increase, Blackberry Still Has Plenty of Upside

Recently, Blackberry (NYSE:BB) made its way onto investors’ radars again as it got swept up in the Reddit meme-stock hype. BB stock practically doubled in the past few weeks, rising from around $8 to a close of nearly $16 on June 8.

the BlackBerry logo presented on a white background
Source: Shutterstock

Now trading at around $14, this hype has slowed slightly but could continue for a while, as Redditors post screenshots of their winnings, fueled by options, leverage and an unhealthy disregard for risk tolerance.

That said, an investment in Blackberry is not as ridiculous as you might think. The company still has the stigma of being a failed phone maker. However, it has since made quite the name for itself in the cybersecurity and automotive industries.

BB Stock: QNX Is More Important Than Short Interest

True, there’s a lot of hype and speculation surrounding BB stock today. However, long-term-oriented investors should focus firmly on the company’s value offering. And looking out five to 10 years from now, the success of Blackberry’s QNX may be the key determinant of its future success. Therefore, it is more important to keep track of the developments on QNX rather than the “noise” generated by everyday stock moves. This is especially important for investors who missed the current huge upswing.

So, what exactly is Blackberry’s QNX product? Simply put, it’s an embedded “real-time operating system” that can be used to control and monitor a wide array of machinery — “ventilators, train controls, factory automation systems, medical robots and more.”

According to Blackberry, QNX has been installed in over 175 million vehicles currently on the road today. Now automakers rely on it for advanced driver assistance, connectivity and the like.

This operating system (OS) has become well-known in the industry for both its security and its stability. That safety record is also more important than ever as vehicles become more intelligent. By way of QNX, then, BB stock coincides with two of my favorite long-term hyper-growth trends: autonomous driving and the Internet of Things.

Basically, in order for autonomous driving to work, more functions of a vehicle will have to be controlled directly by a computer. Furthermore, these computers would need to send signals and communicate with each other in order to avoid any collisions. Because of this, having an OS in your vehicle with top-notch security will be absolutely vital.

With Blackberry having a well-earned a reputation for cybersecurity and now partnering with Amazon (NASDAQ:AMZN) to bring its secure software to the cloud, it seems like the pieces could soon fall into place for BB stock.

Blackberry Recently Inked Key Partnerships

The past few months have also been pretty exciting for Blackberry for other reasons. Mainly, it has inked numerous strategic partnerships.

For example, the company’s partnership with Desay Automotive is particularly exciting. Desay is a leading automotive electronics company located in China. Blackberry has teamed up with the company to develop a “dual-screen virtual smart cabin domain controller to enable safer driving.”

On top of this, BB has also announced a deal with BiTECH Automotive to use QNX in a “digital LCD cluster” for Changan Automobile’s new SUV. This technology helps “guard against system malfunctions, malware and cyber security breaches.”

With many of these counterparts based in China, these partnerships could give Blackberry a foothold in the extremely lucrative Chinese market. Moreover, the autonomous vehicle (AV) market in China is expected to expand rapidly. Analysts forecast a compound annual growth rate (CAGR) of 28.4%, reaching 1.5 million unit shipments by 2025. Being part of that growth would do wonders for BB stock.

Investor Takeaway on BB Stock

BB stock’s price has rocketed in the past couple of weeks. Unfortunately, that fast ascent could be followed by an inevitable correction. Whether that means a further drop from the recent high remains to be seen.

As such, investors should not chase BB stock. However, they should also still keep in mind that Blackberry has a lot of long-term potential as a business. Patient investors should consider purchasing BB stock on a pullback.

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On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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