This hasn’t been a great summer for BlackBerry (NYSE:BB) stock. But that’s OK.
The tech company is charting a new course in the Internet of Things (I0T) and cybersecurity. And it enjoyed some banner days earlier this year as Reddit traders identified it as one of their meme plays.
Even though BB stock is up 50% so far in 2021, the dog days of summer have been less kind. Over the last month, BB is down more than 10%.
If you’re thinking, however, that BlackBerry doesn’t have anything worthwhile except its reputation with Reddit traders, you’d be wrong.
BB stock is much more than a meme stock. And its continued weakness as of late is an expanded window for investors who are willing to capitalize on BlackBerry’s unique growth story.
BB Stock at a Glance
You may remember that BlackBerry once had a leadership position in the smartphone market. But the company failed to adapt by adding a touchscreen display and saw its market share collapse.
While you can still buy BlackBerry smartphones today — you’d have to look pretty hard for them — the opportunity for BB stock to profit in any meaningful way from smartphones has come and gone. That’s fine. In the company’s fiscal first quarter of 2022, BlackBerry made $24 million from smartphone licensing, or roughly 14% of the company’s revenue for the quarter.
Instead, BlackBerry is making roughly 44% of its money from enterprise software. Another 31% of its profits comes from things such as licensing IP. It is heavily involved in projects such as ransomware protection, antivirus products for homes and businesses, and secure voice, messaging and conferencing solutions.
Earnings in the fiscal first quarter of 2022 released in June showed the company posted quarterly revenues of $174 million. That beat analysts estimates of $171.3 million in revenue.
Earnings came in with a loss of 5 cents per share, which was in line with expectations.
Looking Forward
If BlackBerry was determined to stand fast with its smartphone business, and nothing else, I don’t think anyone but the Reddit set would be interested in BB stock.
But that’s not the case. Cybersecurity and IoT are two of the most important properties in today’s interconnected world. And they are two solid growth opportunities for BB stock.
BlackBerry recently announced that HERE Technologies executive Mattias Eriksson as president of BlackBerry’s IoT unit. BlackBerry President and COO Tom Eacobacci is heading the company’s cybersecurity business unit.
Both units are expected to provide revenue and gross margin when the company next reports quarterly earnings. And the results should be significant.
BlackBerry says that the IoT unit generated $43 million in revenue in the fiscal first quarter of 2022. That marked a 48% increase from a year ago.
The company’s GAAP cybersecurity revenue chalked up $107 million in revenue during the quarter, which was a slight decline from a year ago.
One potential avenue for growth is the company’s recently announced BlackBerry Gateway, which will be a secure, cloud-based product for remote workers. Such a program will likely be popular with business customers as more companies settle into a remote or a hybrid workforce.
Another interesting development with revenue potential is BlackBerry Ivy, which is a scalable, cloud-connected software platform for automakers. Ivy, which is being released in October, will allow vehicle manufacturers to read sensor vehicle data and create insights.
The Bottom Line
BlackBerry is much more than a nostalgic meme stock play driven by the traders at r/WallStreetBets. It’s a serious long-term investment for growth investors with a long-term time horizon.
As long as the company continues to focus on growth opportunities such as IoT and cybersecurity, BlackBerry will remain an undervalued stock that has plenty of room for movement and growth.
BlackBerry stock continues to have a “B” grade and a buy recommendation in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (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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