Canadian tech company BlackBerry Ltd (TSX:BB)(NYSE:BB) reports earnings later this month. It has struggled this year, falling by more than 20% since January. And with shares of BlackBerry at less than $4, the stock hasn’t been trading this low since the early 2000s.
For contrarian investors, it could make for a compelling stock to buy given its heavily beaten down valuation, and a fairly new management team in place, focused on growing the business. BlackBerry is particularly excited about opportunities in cybersecurity, IoT, and its QNX operating system as ways its business could get bigger in the future.
The problem is that in the past, BlackBerry has struggled with not just profitability but also generating any significant revenue growth. In the company’s most recent quarter, which ended on Aug. 31, BlackBerry’s sales rose by 10% year over year to $145 million. But over the past several years, it has been largely a downward trend for the business. And BlackBerry still consistently incurs losses. Last quarter, it posted a $19 million loss as despite reporting strong gross margins of nearly 65%, the company’s high overhead and operating costs have prevented it from staying out of the red.
With a lot of competition in cybersecurity and BlackBerry arguably no longer being the top brand it has been in years past, it may be a tough road ahead for the company. The stock could have a lot of upside if management is able to turn things around but that is by no means a guarantee and this remains an extremely high-risk investment.