With its share price continuing to trail off, it’s now a wait-and-see game for BlackBerry (BlackBerry News, Stock Quote, Chart TSX:BB), says portfolio manager Keith Richards, who claims the stock could plummet if it breaks through a key support level.
BlackBerry’s 2019 started off very well, with the stock gaining a full 40 per cent over the first three months, but since then it’s been mostly downhill, as all of those gains have now been erased and the stock looks about set to test a support level at C$9.00. Below that could be a significant plunge, says Richards of ValueTrend Wealth Management, who spoke to BNN Bloomberg on Tuesday.
“We own this stock, unfortunately. It’s been our single biggest dog,” Richards says. “There has been this really long, maybe five-year pattern but it is holding its last low.”
“It’s precarious. If it breaks, I will be out of the trade, but for now I’m in,” he says. “I’m underwater on it and I’m trying to be disciplined on this stuff. If it breaks, it breaks and I just say goodbye, but I’m giving it the benefit of the doubt because it has bounced off of these levels before. We’ll see what happens.”
BlackBerry has been roundly praised for its transformation from phone maker to software and security company but questions remain about revenue growth, with the company’s latest quarterly results coming as a prime example. While BB beat analysts’ estimates on adjusted revenue for its fiscal first quarter, coming in with a $267-million top line which was better than the expected $265 million, the company’s share price fell sharply with the quarterly release, nonetheless. (All figures in US dollars unless noted otherwise.)
The drop in share price was reportedly attributed to concerns over competition along with seemingly underwhelming results from Cylance, BlackBerry’s cybersecurity subsidiary, which brought in $32 million in GAAP revenue for the quarter.