Why is BlackBerry Stock so Cheap?

We see another throne fit for Canada’s former smartphone king.

Andrew Willis 5 January, 2024 | 4:28AM
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Interested in other cheap stocks? Check out our recent episode on Ski-Doo maker BRP

Key Takeaways for BlackBerry Stock:

  • Investors may be selling BlackBerry on its inability to compete with enterprise software giants like Microsoft and VMware in cybersecurity.
  • We expect BlackBerry to focus on investments to improve operating expenses and that its greatest opportunities may help make up for market share losses in the enterprise software space.
  • BlackBerry’s reputation in the regulated sector can be applied to other industries with a strong need for security and reliability, such as autonomous vehicles. The company is already the leading embedded software provider for infotainment and driver assistance.  

 

Andrew Willis: Did you know that BlackBerry BB is the leader in automotive software? Its solutions are used by most global manufacturers and hold the highest security certifications.

Indeed, the former smartphone maker is now more of an embedded software provider, but investors may have been selling BlackBerry stock on a relatively slower cybersecurity business at the company. Equity analyst William Kerwin says he expects slower growth in the segment, where the company needs to apply its reputation in regulated industries to a broader base of enterprises.

BlackBerry Auto Business Could Make Up for Enterprise Stagnation

We think with competition ramping up in cybersecurity, there are greater growth opportunities in the automotive market. There the Canadian company can apply its reputation for security to not only handle the music but also take the wheel with autonomous vehicles– and finally put BlackBerry back in the driver’s seat of an industry.

For Morningstar, I’m Andrew Willis.

bulls BlackBerry Bulls Say

  • BlackBerry is the leader in embedded automotive software, with its solutions spanning most global OEMs and holding the highest security certifications.
  • BlackBerry’s focus on security gives it an advantage in regulated industries, like government, healthcare, and financial services.
  • BlackBerry IVY—the result of a partnership with Amazon Web Services—could create a revolutionary software ecosystem for connected vehicles, allowing OEMs to process, analyze, and monetize massive amounts of vehicle data.

bears BlackBerry Bears Say

  • BlackBerry doesn’t have the scale, breadth, or name recognition to compete in enterprise software with giants like Microsoft and VMware.
  • BlackBerry has been quickly losing share in a rapidly growing enterprise security market.
  • BlackBerry has yet to prove its ability to grow organically as a software company.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BlackBerry Ltd3.63 CAD-0.82Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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