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Stock Analyst Update

BlackBerry Caught Up in Meme Stock Fever Again

We're maintaining our $7 fair value estimate.

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No-moat BlackBerry (BB) has undergone steep price appreciation over the past week to the $17 range, but we are maintaining our $7 per share fair value estimate and view shares as fundamentally overvalued. As of the morning of June 3, BlackBerry’s share price has gone up as much as 100% from its prior-week levels, with increased volatility. In our view, this is purely the result of resumed interest in the stock from Internet message boards, like WallStreetBets on Reddit, and not rooted in any news or fundamental shifts in the business.

We’ve seen this play out before with BlackBerry shares, back in late January 2021 when Reddit users created a retail investor groundswell for stocks like GameStop (GME), AMC (AMC), and BlackBerry. In less than two weeks, BlackBerry shares spiked over 300%, just to plummet over 50% in the following week. We caution long-term investors about the risk of a similarly precipitous decline to come for BlackBerry this time around.

Our long-term thesis for BlackBerry is unchanged. We expect 12% compound annual growth for the firm’s software and services revenue over the next 10 years as it partners with autonomous vehicle OEMs and wins new customers for its enterprise software suites. Finally, we note that BlackBerry is in ongoing talks to sell off a large portion of its patent portfolio, but until a deal is reached, we model a potential deal as value neutral to our $7 fair value estimate.

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William Kerwin does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.