Is BlackBerry in the middle of another failed rally?

Well known Canadian tech name BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) has come out with a spate of interesting news items of late, and with its share price on the upswing to start the new year, is the stock looking like a buy?

Certainly not from a technical perspective, says portfolio manager William Chin, who advises caution when it comes to BB.

The past couple of years have been a disappointment for fans of BlackBerry, to say the least, as the company’s much-heralded comeback seemingly stalled and left the market wondering from where the growth prospects will come.

BlackBerry’s 2019 pushed the stock to lows not seen since the later days of the company’s demise as a handset giant in 2014. BB hit $18.00 per share in early 2018 as optimism bloomed about a remodelling as a software and security business, but it’s been mostly downhill since then with the stock ending up in the $7.00 range by October of last year.

“You can see all these previous failed rallies and one of them stops at $12 and the last one was probably around $10…”

For BlackBerry, revenue wasn’t picking up on a quarterly basis as expected, while last year, numbers from major purchase and cybersecurity bet Cylance failed to impress. The stock saw a significant drop last September, for example, with the release of second quarter financials that showed a decline in the company’s key enterprise software and technology solutions business, which brought in revenue of $134 million, well below the $150 million expected by analysts.

Looking at the current chart, Caldwell Investment Management’s Chin isn’t impressed.

“You can see all these previous failed rallies and one of them stops at $12 and the last one was probably around $10,” says Chin, speaking to BNN Bloomberg on Tuesday.

“$12 would be difficult to get to unless it has a more promising base formation and it could be a dangerous position to wait for too long given all the failed rallies,” he said. “It looks like there are other investors who are caught long that might want to get out. I’d be cautious on this one.”

All the same, a better-looking quarter came in December for BB’s fiscal third quarter — the company posted top and bottom line beats with revenue up 23 per cent year-over-year and earnings of $0.03 per share compared to the expected $0.02.

The stock promptly jumped 13 per cent and has been on the upswing since, registering four per cent growth to start 2020.

The news cycle has recently brought BlackBerry into the conversation, too, with the company announcing a collaboration with Amazon’s cloud business AWS for BlackBerry’s Internet of Things platform QNX, in this instance, highlighting its implementation in the connected car’s in-vehicle applications.

At the same time, BlackBerry announced at CES 2020 in Las Vegas the “major plan” of integrating Cylance’s cybersecurity capabilities with QNX’s software suite for autonomous vehicles.

The press shows off BlackBerry as seemingly well-positioned in the growth fields of security and autonomous vehicles.

“The architecture of the cars is changing, and we’re happy to be powering the traditional systems and the new next-generation systems safety systems,” said Grant Courville, vice-president of product and strategy at BlackBerry QNX, in a January 13 press release. “That brings in that need for reliability, obviously, but also a big need for security and resiliency…that’s where BlackBerry comes in with Cylance.”