Previously trading in the $8 range, BlackBerry (TSX:BB) shares rocketed to as high as $20 before plunging. The weak first-quarter results will end the positive momentum that lifted the stock.
Reddit’s infamous WallStreetBets sub-group tried, for a second time, to attract and sustain buyers. But BlackBerry did not do its part to justify the rally. Revenue fell by 15%, beating expectations and exceeding analyst expectations.
Analysts downgraded the stock a day too late and after the stock drop. For example, many analysts are taking a wait-and-see approach. They first want to see BlackBerry monetize its licensing business. Without that, the firm will continue to lift core software sales.
Opportunity
BlackBerry posted a few positive figures. Its non-GAAP EPS loss improved from negative 11 cents last year to a loss of just five cents in Q1. It ended the quarter with $769 million in cash. BlackBerry also announced BlackBerry Gateway and Optics 3.0. Those two new products may help grow its UES product sales.
The company’s software sales weakness is an ongoing concern. It needs to aggressively monetize its patent portfolio to increase cash flow. From there, the company may invest further in its products to increase customer satisfaction and demand levels.
Investors should sell BB stock at these levels. Chances are high that the stock will fall back to pre-rally levels.