Shares of BlackBerry (NYSE:BB) are trading erratically today after the Canadian technology company reported its net loss tripled in this year’s first quarter to $181 million.
The loss was mainly due to the Waterloo, Ontario-based company settling a long gestating class-action lawsuit brought against it by shareholders who claimed the company made false and misleading claims about the BlackBerry 10 smartphone it released back in 2013. BlackBerry reportedly paid $165 million to settle the lawsuit.
Aside from that one-time legal cost, BlackBerry’s latest earnings matched the consensus estimates of analysts and showed strength in many business segments. Nevertheless, investors appear to be focused on the headline of a $181 million net loss.
After opening lower, BB stock is up about 4% today in fluctuating trading. So far this year, the company’s share price has declined 40% to trade just above $5.50.
What Happened With BB Stock
BlackBerry reported that it lost 35 cents per share compared with a loss of 11 cents per share, or $62 million, a year earlier. Excluding the legal settlement and other one-time items, BlackBerry said it lost $31 million, or 5 cents per share, compared with a loss of $27 million or 5 cents per share in the year-earlier period. The company added that its revenue for the three months ended May 31 declined to $168 million from $174 million in the same period of 2021.
The results were broadly in line with what analysts had expected from BlackBerry. Wall Street was looking for the technology company to report an adjusted loss of 5 cents per share on $160.7 million of revenues, according to data supplied by Refinitiv.
In its earnings release, BlackBerry highlighted that revenue from its Internet of Things unit grew 19% year-over-year during the quarter to $51 million, and its cybersecurity revenue increased 6% to $113 million.
Why It Matters
The latest net loss from BlackBerry, even though it is attributable to a one-time legal settlement, continues a string of negative news that has been piling up in recent years and turned investor sentiment negative. Earlier this week, BlackBerry shareholders voted to reject the company’s executive compensation for the year in yet another blow to the once-mighty maker of smartphones.
BlackBerry has not been the same company since it exited the smartphone business and refocused its efforts on software development, primarily for self-driving vehicles. Owing to its financial difficulties and the large short position professional traders hold against it, BB has been treated as a meme stock over the past 18 months.
Last year, BlackBerry’s share price spiked above $14 on multiple occasions as retail investors executed a short squeeze on it. Each time, the stock came crashing back to earth and has been flirting with penny stock status for most of this year.
What’s Next for BB Stock
BlackBerry has become a “show me” stock. The company has to demonstrate to analysts and investors that it can get its financial house in order and post successive quarterly results that exceed expectations. As long as BlackBerry continues to post big losses (regardless of the reason), sentiment toward the company will remain negative and BB stock will continue to decline.
On the date of publication, Joel Baglole 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.
