BlackBerry (BBRY) certainly been on a roller-coaster ride in 2013. BlackBerry stock is up about 25% from July lows on talks the company is “open to going private” but remains down 9% year-to-date on the flop of its Z10 launch.
So what’s next for BlackBerry stock? Well plainly, long-term investors need to be realistic about BBRY and admit defeat — and swing traders need to be awfully careful as they play this volatile name.
That’s why I say sell BlackBerry stock and don’t look back.
BlackBerry stock is dead. There will be no buyout of BBRY, the Z10 and Q10 will not catch on, it will only lag farther behind, and investors need to move on.
By 2015, this company will be just a memory. Mark it on your calendar.
Why? Because on a basic level, BlackBerry stock is on a trajectory for defeat right now with a failed line of products and operations that continue to bleed red ink. The only way to change that is to overhaul the existing BBRY structure under current management (which isn’t happening) or to depend on this mythic unicorn of a buyout that’s buzzing around Wall Street.
I personally think the buyout buzz is BS, though. Why?
- The price is wrong on BlackBerry stock at $11 a share. It traded in single digits for a large portion of 2012, and the outlook hasn’t improved any.
- Only the gutsiest buyers would be game, because this isn’t a logical turnaround based on moving around cash on a balance sheet, but a complete reshaping of BlackBerry stock and the BBRY product line.
- Turnarounds might happen in a lot of other sectors, but rarely in tech. Other than IBM (IBM) or Apple (AAPL), I challenge you to name another in the past 20 years.
- The only buyers out there might be looking for parts, not the whole … and CEO Thorsten Heins and the board aren’t interested in seeing BlackBerry wind up on the scrap heap just yet.
That leaves us with a failing company and no hope of changing course. Seems like a pretty cut-and-dry case to simply quit BlackBerry stock and move on with your life.
I simply don’t understand the argument for buying BlackBerry stock and not another tech issue.
If you want a value play, why not Apple stock with its $140 billion in cash and long-term investments and new champion Carl Icahn? If you want a speculative tech turnaround, why not Microsoft (MSFT) with its Surface and Windows Phone OS, which are just as second-tier as BlackBerry right now, but at least have the full weight of a tech megacap with almost $29 billion in operating cash flow behind the efforts?
Why not bank on the Motorola acquisition finally paying off for Google (GOOG) in hardware like the Nexus 7 tablet and new Moto X smartphone? Or why not bank on content sales instead of hardware via Amazon (AMZN) and its Kindle, using Amazon.com’s full e-commerce might to give iTunes and even Netflix (NFLX) a run for their money in music, video and more?
If you want to just speculate on charts and pure sentiment, go ahead. But even then there are a host of other fast-moving players on Wall Street other than BlackBerry stock to use as day trading fodder.
Bottom line: Nobody believes in BlackBerry stock on the rather pathetic relaunch of its smartphone line, with its new Z10 and Q10 devices failing to catch on and older models still making up the majority of BlackBerry sales in its June earnings report.
BlackBerry stock has rallied more recently because some think the bears are being just plain unfair, that BBRY patents and security chops alone are worth more than the current share price. Big Canadian investor Prem Watsa, who some call “the Canadian Warren Buffett,” continues to stand behind BlackBerry stock, for instance. He has a leading 10% stake in BlackBerry stock right now.
But let’s not be naive. This isn’t a supermarket chain or a glue manufacturer that simply needs to regroup out sight from Wall Street analysts and public shareholders. BlackBerry stock is doomed as either a private company or a publicly traded investment because its technology isn’t popular with consumers, businesses are moving on and competitors are widening the gap every day.
Remember, BBRY was depending on its BlackBerrry Z10 and Q10 phones to bring the company up to the same plane as the Apple iPhone and Samsung (SSNLF) and its Galaxy phones. That effort failed miserably, as evidenced by a surprise quarterly loss for BlackBerry stock at the end of June. BlackBerry 10 devices, including the Q10 and Z10, made up just 40% of the company’s smartphone shipments in the period.
Sure, there’s enterprise … who do you think will win that war longer-term? Microsoft with its connections, desperation over mobile and $78 billion in cash and investments? Or a currently unprofitable BlackBerry stock that’s operating in the red?
I said it before and I’ll say it again: There is no hope for BlackBerry. Feel free to ride the roller coaster if you have nerves of steel and a great grasp of technical analysis that will allow you to make a quick buck.
But for long-term investors, BlackBerry stock is toxic. The only thing to do now is sit back and wait for the inevitable demise of BBRY altogether.
- More on why BlackBerry stock is not a buy … and why I think BBRY is doomed. (The Slant)
- BlackBerry’s death rattle grows louder. (The Daily Beast)
- John Paczkowski wonders who would actually buy BlackBerry stock to take it private. (AllThingsD)
- Skeptics reign amid BBRY buyout talk. (MarketWatch)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.