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Source: BlackBerry Facebook

Blackberry (BB) Stock Outlook Amid Reddit Short Squeeze Fatigue

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Jun. 17 2021, Published 2:58 p.m. ET

Some investors have made good short-term profits with BlackBerry (BB) stock recently. The stock leapt from below $8 to above $20 and delivered nearly 200 percent returns in just about a week. Reddit has been mostly behind that spike, leaving many investors wondering where BlackBerry stock is a good long-term investment.

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BlackBerry is attempting a turnaround after exiting the phone-making business to focus on software and services. However, the business isn’t booming yet. It made a loss of $1.1 billion in its latest fiscal year. The company's revenue also fell.

Seeing the company’s struggles, many hedge funds decided to bet against BB stock. They ended up driving BlackBerry stock’s short interest so high that they became susceptible to a short squeeze. Reddit investors in the WallStreetBets community didn't waste any time and exploited it.

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blackberry stock
Source: BlackBerry Facebook

BlackBerry stock’s Reddit tailwind suffers fatigue

BlackBerry’s recent spike followed the AMC stock explosion. Many hedge funds don't think that AMC has a bright future and they shorted it. That opened an opportunity for the WSB army to initiate a short squeeze, which drove AMC stock up about 3,000 percent for the year.

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As the AMC short interest declined, Redditors turned their focus to other stocks with short squeeze potential. They found BlackBerry and several other meme stocks. BB still ranks among the most popular stocks in the WallStreetBets community. However, the stock has dropped from its squeeze peak as its short interest declines.

BlackBerry (BB) stock is a good long-term investment.

With the shrinking short interest, BlackBerry’s time as a Reddit playground might come to an end soon, which could create a great opportunity for investors with a long-term view to get in. If you’re going to park money in BB stock for years, it would be wise to assess its prospects and know the best point to enter.

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As for the best price to buy BlackBerry stock, you need to know the important events coming ahead and their potential impact on the stock price in the short and long term.

BlackBerry plans to host its annual shareholder meeting on June 23. The company has made it easier for non-registered shareholders, who might include the Reddit crowd, to vote on the proposal during the coming meeting. The company acknowledges that non-registered shareholders have become a substantial segment of its investor base.

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However, a battle is brewing. Shareholder advisory firm Glass Lewis has urged investors to reject BlackBerry’s executive compensation plan at the meeting. The firm said that BlackBerry bosses don’t deserve to be rewarded for Reddit-influenced rally in BlackBerry stock.

A day after hosting the shareholder meeting, BlackBerry plans to release its results for the first quarter of fiscal 2022 on June 24. BB stock could be volatile ahead of these events, so you need to carefully pick a long-term entry point. Looking at BB stock's price before it became a short squeeze battleground, the price was $5–$8. It looks like picking the stock up in the single-digits territory for a long-term position would be smart.

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blackberry stock outlook
Source: BlackBerry Facebook

BlackBerry stock’s long-term outlook

Where will BlackBerry be in 5 or 10 years from now? The company has transformed itself from a smartphone pioneer selling handsets to a software and service company. As far as software, the automotive industry has been a big focus for the company as drivers shift to connected cars. BlackBerry partnered with Baidu, China’s equivalent of Google, on a car software program with a focus on connected car security.

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Many auto companies have adopted BlackBerry technology. A recent win for the company is a deal with China's BiTECH Automotive, which supplies automakers like Changan Automobile. Changan’s car sales are increasing rapidly. It sold about 1 million vehicles in 2020 and its sales could reach 1.4 million vehicles in 2021.

The rollout of 5G networks is fueling the IoT (Internet of Things) where devices range from factory machines to cars on the road connecting to the internet. That in turn is expanding opportunities for BlackBerry to sell its software. As the growing hacking threats increase the urgency to secure IoT devices and BlackBerry is a trusted brand in the security software market. 

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