BlackBerry (BBRY) hasn’t had a lot of good news since the spring, when BBRY stock was trading above $16 a share at the end of April. Now, despite a BlackBerry buyout offer for $9 per share from Fairfax Capital and its iconic chief Prem Watsa, the BlackBerry stock price is stuck around $8 — a 50% loss in just a few months.
BBRY investors are crushed, consumers with BlackBerry smartphones are abandoning ship … but wait! Here are your fearless leaders at the crumbling Canadian tech company telling you that all is well and there’s no need to worry!
In an open letter to its customers and partners, BlackBerry took to social media and to 30 newspapers in nine countries to reassure everyone that it still has something to offer.
“You can continue to count on BlackBerry,” the letter from BBRY read. “These are no doubt challenging times for us and we don’t underestimate the situation or ignore the challenges. We are making the difficult changes necessary to strengthen BlackBerry.”
Seriously guys, you don’t have a better use of company capital than this ad blitz?
It’s not like that marketing budget alone can move the BlackBerry stock price, but come on.
This isn’t a story about how the iPhone from Apple (AAPL) or Android devices powered by Google (GOOG) are “better.” And this isn’t a story about whether BlackBerry has enough cash now to keep the lights on for another year or so.
This is really just a story of tone-deaf management, and delusion that BlackBerry will not just survive but thrive going forward.
Because that’s not going to happen.
BlackBerry Buyout Talk Needs to be Realistic
BlackBerry stock has been the subject of serious buyout talk for weeks ever since Fairfax offered up a $9 per share BlackBerry buyout proposal at the end of September. But ever since then, BBRY has struggled to get to that $9 mark — and has even traded for less than $8 a share.
That tells you everything you need to know. When a potential suitor offers a 12% premium on shares but investors still think the BlackBerry buyout won’t happen, the situation is nothing short of desperate for BBRY.
Heck, a Wall Street analyst just hung a $7 target on the stock.
So while it’s all well and good to pay attention to BlackBerry buyout prospects and consider an arbitrage bet based on BBRY shares and what a fair price would be, don’t get sucked into the pie-in-the-sky optimism or the willfully naive reassurances of management.
BlackBerry is in serious trouble and will not be around for long. Investors need to act accordingly — and for most of us, that means avoiding BBRY stock like the plague.
Related Reading on BBRY
- BBRY co-founders Mike Lazaridis and Doug Fregin have filed documents for a BlackBerry buyout offer of their own. (Value Walk)
- One analyst has a $7 target on shares. (24/7 Wall St.)
- Why BlackBerry stock is still way too expensive despite buyout offer. (The Slant)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at email@example.com or follow him on Twitter via @JeffReevesIP.