BlackBerry (NYSE:BB) stock is finally back in a trading range. It’s like a possum or a mouse around a predator — the less it moves, the better its chances the varmint will assume it’s dead and pass it by. That’s actually good news for investors that see the value that BB stock represents.
You see, BlackBerry isn’t like other meme stocks that have no real value and only rise and fall on the new wave of young investors on fun, cheap trading platforms that use many low volume out-of-favor stocks as a form of social entertainment.
I mean, that kind of trading certainly has its place in a market that hasn’t seen a significant correction in far too long.
Now that’s not to say I want the stock market to crash. But look at the fires in the West. One key reason they’re out of control is no one was interested in spending money on forestry management when there were no fires.
It’s a fact that a robust maintenance program would have helped keep the fire seasons contained and less devastating. But years of ignoring the big potential downside for the short-term upside (development, timber, spending elsewhere, etc.) meant kicking the can down the road until nature rose up defying the best laid plans (or lack thereof) of man.
The market has been in a similarly artificial wonderland but its reckoning will be similarly devastating.
BB Stock and Digital Natives
This new wave of day-traders are simply taking advantage of current market conditions and BB stock’s been caught up in the furor. “Buy the dip” has been the rallying cry for nearly a decade. And with central banks managing an artificially low-rate interest rate environment, risks have been low.
So it only makes sense a new generation of digital native investors have combined social media with gamified trading platforms to use the markets as combined entertainment and investment vehicles.
Wall Street was slow to realize this transition was happening so quickly, but it knows how to make money and quickly joined in.
We’ve seen all sorts of fringe behavior in traditional markets become reality in today’s market.
And that means this new trading machine eventually starts consuming perfectly good companies along with the weak and wounded. That’s where BB stock comes in.
Tech Typecast as a Meme
Today, BB stock is typecast as a meme stock when it has been and remains a viable tech stock with real products that major corporations value.
In December, Amazon (NASDAQ:AMZN) announced a partnership on BlackBerry IVY, a cloud-connected digital vehicle platform. Amazon Web Services (AWS), the largest cloud player in the world, partnered with the communications tech maker. That’s a big deal.
And the shares took off for a while. But BB stock couldn’t shake the meme status. It also couldn’t turn the company around in a quarter or two, after years of flat revenue.
Real Long-Term Investors Wanted
At this point, BB stock is trading between $10-$11. And that’s a decent price to pay for a company that was once a major market leader that still has some valuable technologies to contribute to our new “smart” digital world.
Yes, the stock has gained 60% year to date and still has negative earnings. But things are changing. Some of its troubles are tied with the chip shortage in the auto industry, since much of BB stock’s value comes from products associated with smart cars and trucks.
But after all the typecasting and day trading frenzy, there’s a solid company that’s trading at a decent price for long-term investors. Also on the bright side is the influx of capital has helped boost operating capital and its meme stock status has revived name recognition.
On the date of publication, GS Early 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.
GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and heard plenty.
