Should Blackberry Stock be a Part of Your Portfolio?
October 18 2021 - 5:59AM
Finscreener.org
BlackBerry (NYSE:
BB) is a Canada-based
cybersecurity company that provides organizations with
enterprise-level critical event management solutions and endpoint
protection services. It’s also gaining traction in verticals such
as cyber security and the internet of things while utilizing
artificial intelligence and machine learning technologies in these
segments.
The stock has been on a roller
coaster ride this year with its stock price fluctuating from as
high as $28.77 per share to as low as $4.44. However, despite such
volatility, Blackberry stock can be a great addition to your
portfolio as it is an established player in the exploding
cybersecurity space.
Huge growth prospects
As the world moves towards
digitalization, demand for enterprise-level cybersecurity solutions
is steadily increasing. Besides, post the pandemic many
organizations intend to shift permanently to a remote work
structure and this is a huge opportunity for Blackberry’s
cybersecurity segment allowing the company to capitalize on the
growing momentum to drive growth in the future.
IoT and QNX are the other two
segments that have contributed immensely to the company’s growth.
Blackberry had increased its deployment of QNX in vehicles to
offset its relatively weaker cybersecurity sales and its
revolutionary OS has already been embedded in more than 195 million
vehicles.
Additionally, Blackberry’s
partnerships with giants like
Amazon Web Services
(NASDAQ:
AMZN), Alphabet
(NASDAQ: GOOGL)
and Qualcomm (NASDAQ:
QCOM) are some other big
developments that can catalyze its growth. With AWS, Blackberry
would be developing and launching a software platform that can aid
in managing and exchanging vehicle data in a secured environment
while with Alphabet and Qualcomm the company would be providing the
users with a solid Android experience at a reduced
cost.
Interesting movements
Blackberry has recently has made
a few interesting announcements post which its shares had started
rallying. Firstly, it announced that the
QNX Hypervisor and VIRTIO
will be available now to deliver the
“ultimate cockpit experience” in the automotive industry having
features such as faster booting or sharing of audio, graphics,
video (camera), touchscreen, vehicle HAL sharing
etc.
Secondly, the company has also
announced updates to
BlackBerry Guard
2.0, the artificial
intelligence-powered mobile threat defence system. This update will
not only provide users better protection against cyberattacks but
also has advanced features like automated rapid response reports to
contain threats. Therefore, this move can push more and more
enterprises and governments towards signing up for its subscription
platform.
Finally, Blackberry has
joined forces with organizations like Okta (NASDAQ: OKTA), Mimecast, Stellar
Cyber, and
XM Cyber as its new partners in the extended detection
and response (XDR) ecosystem. These set of partnerships will
further help the company in spreading its prevention first approach
i.e identifying threats in the partnerU+02019s telemetry itself
before those propagate further in the environment.
Increasing Losses
Blackberry’s
second-quarter financials
look disastrous at first glance. Its
revenue had decreased 32% YOY and the net loss had reached $141
million compared to the net loss of $23 million last year. While
the IoT segment showed some growth the cybersecurity segment stayed
flat. The company’s management has been steadily trying to
improve its core performance and has stated they would focus more
on growth than on profitability at present. This might mean that
losses will increase further over the next several quarters,
weakening the companyU+02019s balance sheet until growth
initiatives in the cybersecurity and IoT segments become
successful.
Blackberry stock is not for the
short-term investors as it will remain vulnerable until its growth
story gains pace and the top-line normalizes. Moreover, the
company’s recent announcements might look exciting but one must
understand that those haven’t turned to revenue yet. Besides,
despite such interesting partnerships the company has entered into,
its revenue still needs to climb a lot more to reach where it used
to be decades back.
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