Are BlackBerry shares a buy at $16?

BlackBerry (NYSE:BB) has had a weird ride to this point in 2021. It's not just cryptocurrencies which are driven via what's going on on social media. No, by means of 27 January, BlackBerry shares had more than quadrupled from their end-of-2020 price. And the climb seems to have been in accordance with a bullish frenzy on Reddit.

The January Reddit craze at once subsided, and the rate fell returned, but nevertheless retained a few of its positive aspects. since then, BlackBerry shares had been slowly declining. however that turned into only unless June, and the BlackBerry share rate has now been launched upwards once again.

It's doubled in the past month and stands at a color below $16, as I write. What's in the back of it this time? Will we see a climb beyond January's height, and are BlackBerry shares a buy at the moment? It's no longer convenient to peer a superb purpose at the back of the existing bullishness. at the least there's none that i can see.

software potential

BlackBerry is a extremely distinctive company to the one which made those humorous telephones with keyboards all these years ago. It doesn't make these any further, having converted into a application developer. The enterprise now does cybersecurity application and additionally for the automotive trade. I reckon these are areas with appreciable long-term potential. however BlackBerry doesn't seem poised for any great step forward or vital development any time soon.

Forecasts for the 12 months to January 2022 imply a fall in revenue of 10%, to around $824m. As for earnings, analysts have BlackBerry down for a loss per share of five cents for the 12 months. So its shares have no forward P/E distinct to move on. And with the business on a market-cap of practically $9bn, we're a value to revenue ratio of very nearly eleven.

BlackBerry shares attraction?

That doesn't scream 'purchase' to me, so what's the enchantment? Some US commentators indicate it's all about shorting. BlackBerry is a big target of the shorters presently, with around 10% bought short at the moment. So is all the purchasing an try to force a brief squeeze for a short profit? It might smartly be.

I see a couple of lessons for lengthy-term foolish traders right here. in all probability probably the most evident is don't take any note of social media. Ramping on Reddit is most in reality not a fine intent to buy BlackBerry shares, in my ebook.

It changed into dangerous sufficient within the historic days when short-term chancers would pump up shares on investing boards in the hope of constructing a brief killing. however social media attracts in those that in any other case have little interest in, or abilities of, stock market investing.

Valuation, valuation

The different lesson is that fundamental valuation is what counts. sure, stocks can have very excessive valuations on usual measures, but it is commonly justified. a lot of groups have grown to outstrip their early high valuations, after which long past on to even more suitable things. I'm just now not sure I'm given that with BlackBerry.

So are BlackBerry shares a buy at $sixteen? on account that the cost appears to be driven by nothing rational at the moment, they're now not a buy for me presently.

"This stock can be Like buying Amazon in 1997"

i am certain you're going to agree that's reasonably the remark from Motley idiot Co-Founder Tom Gardner.

but considering that our US analyst crew first advised shares in this wonderful tech stock lower back in 2016, the value has soared.

What's greater, we firmly consider there is nonetheless a variety of upside in its future. in fact, even all through the existing coronavirus crisis, its performance has been beating Wall St expectations.

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Alan Oscroft has no position in any of the shares mentioned. The Motley idiot UK has suggested BlackBerry. Views expressed on the organizations mentioned in this article are these of the author and therefore may additionally range from the reliable strategies we make in our subscription features reminiscent of Share consultant, Hidden Winners and pro. right here on the Motley fool we accept as true with that given that a diverse range of insights makes us greater investors.