BlackBerry Pulls a Lazarus-Like 57% MTD Stock Surge After Stunning Wall Street–Here’s Why…

Ah, BlackBerry. The once-mighty king of QWERTY keyboards and holsters that screamed, “I work in finance.” For years, it’s been the punchline of every “remember when” tech joke, but this week? BlackBerry just pulled a Lazarus on Wall Street, with its stock surging a whopping 22% on Friday. Why? A surprisingly solid Q3 earnings report and a big “we’re cutting our losses” moment.

(Source: Giphy) 

In short, BlackBerry posted Q3 revenue of $162 million, smashing analysts’ lowball estimate of $143 million. Sure, sales were still down 7.4% year-over-year, but when expectations are lower than a limbo bar, you don’t need much to impress. But the real MVPs of this earnings happens to be BlackBerry’s Internet of Things (IoT) and cybersecurity divisions, which grew 13% and 7% sequentially, respectively. Adjusted EPS came in at 2 cents—modest, but better than the goose egg analysts were expecting. And for the cherry on top, BlackBerry managed to scrape together $3 million in free cash flow. That’s a far cry from the $33 million cash bonfire they were hosting this time last year.

Naturally, CEO John Giamatteo called the results “stronger than expected profitability” and a “return to positive cash flow ahead of schedule.” Translation: “We’re back, baby (sort of)!” 

(Source: Barrons) 

But, but, but… the biggest headline here is that BlackBerry is selling its Cylance cybersecurity business to Arctic Wolf for $160 million. Now ICYMI, Cylance was supposed to be the AI-driven security wunderkind that would help BB reinvent itself after smartphones went the way of MySpace. Spoiler: It wasn’t. BlackBerry shelled out $1.4 billion for Cylance back in 2019, and now they’re selling it for pennies on the dollar. Meaning, ditching Cylance might just be the smartest move they’ve made in years. Without it, the EBITDA for their cybersecurity unit jumps from $8 million to $22 million. Talk about addition by subtraction.

Wall Street, of course, is eating it up. TD Cowen upgraded BlackBerry from “Hold” to “Buy,” raising their price target from $3.25 to $4 per share. Baird took a more cautious approach, bumping their target from $3 to $3.50 but sticking with a “neutral” rating. Because, let’s be real, BlackBerry’s got a long history of overpromising and under delivering.

(Source: Investing.com) 

With that said though, there’s still some skepticism here. Especially since BlackBerry trimmed its full-year revenue guidance to $517–$526 million, down from the $591–$616 million it had previously forecast. But hey, they’re blaming the Cylance fire sale for that, and fair enough. For now, Wall Street seems willing to give them a pass. 

So in the end, is this the  long-awaited BlackBerry turnaround or just another dead-cat bounce? Hard to say. IoT is seeing some nice growth, and the QNX royalty backlog (basically, future cash from software in cars) is creeping toward $1 billion. But meaningful growth? That’s still TBD. For now though, BB shareholders can bask in the glow of a 57.01% MTD stock gain. Which, I must say, is one helluva Christmas present.

(Source: Giphy) 

In the meantime, I wouldn’t let my FOMO get me horned up on this. There’s still a lot going for BlackBerry that’s uncertain, but right now… all the stars seem to be aligning for the company and its investors. The only question is: How long will it last? Only time will tell, but filter this through a brain-cell and don’t be dumb. Place your bets accordingly and as always, stay safe and stay frosty, friends! Until next time…

P.S. At the end of the day, we all know what drives the markets right? Greed and fear. That’s it. When big money starts piling into a certain place, stocks go up. When big money starts bleeding out of a certain place, stocks go down. It’s that simple. Which is why, with the Stocks.News insider tool, we are able to see this exact phenomenon play time and time again. So with that said, why not see how your portfolio is holding up with insiders BEFORE the next big move takes place (up or down)? Click here to snag a borderline outrageously cheap membership to Stocks.News premium and start leveraging our proprietary Insider Tool today! 

Stocks.News does not hold positions in companies mentioned in the article.