Yahoo Finance 3 Reasons to Add BlackBerry Ltd. After its Post-Earnings Drop
BlackBerry Ltd. (TSX:BB)(NYSE:BB) stock has dropped 15.9% as of close on April 4 since releasing its fiscal 2018 fourth-quarter and full-year results on March 28. This dramatic plunge sent the stock into negative territory for 2018 before the first trading week in April came to a close. However, shares are still up 24% year over year.
Under the leadership of CEO John Chen, who was appointed in November 2013, BlackBerry has made a successful transition to a software company with a sizable footprint in several growing industries. Investors should not be overly discouraged by the recent dip. In fact, the drop may present an opportunity to stack shares, as BlackBerry remains attractive for the long term. Let’s look at three reasons to add the stock to your portfolio.
Cybersecurity coming into greater focus
In a recent interview, CEO John Chen said that he felt vindicated in betting on cybersecurity after the recent data scandal at Facebook Inc. On April 4, Facebook revealed that as many as 87 million people had their data accessed in the recent Cambridge Analytica scandal, and this included over 600,000 Canadians. Facebook founder and CEO Mark Zuckerberg will testify before U.S. Congress on April 10 and 11 to provide answers in what has been the company’s greatest challenge since its public listing.
What does the scandal mean for BlackBerry? Cybersecurity is expected to produce huge growth in the next decade, with analysts projecting compound annual growth (CAGR) of 8-15% into 2022. BlackBerry has secured deals with U.S., Canadian, and other international governments to provide mobile security. It also launched its own cybersecurity consulting services in late 2017. It is well positioned to capitalize on this growing market going forward.
Autonomous vehicle industry growth unlikely to be impeded by recent accidents
Uber was forced to scale back its self-driving vehicle program after a fatal accident in Arizona in March. The incident sparked reflection in the fast-growing autonomous vehicle industry. According to Report Linker, a market research solution, it will likely take more than 25 years to bring self-driving vehicle road fatalities to zero. However, the report also projects that the global autonomous driving market will exceed $170 billion by 2030, and shared mobility services will contribute over 65% of that growth.
In January, the Chinese internet search firm Baidu Inc. partnered with BlackBerry to develop self-driving vehicle technology. BlackBerry’s QNX software will be the operating system for Apollo, Baidu’s self-driving vehicle platform. BlackBerry has also developed “Jarvis,” which aims to find cybersecurity flaws in autonomous vehicles.
Solid earnings continue with recent report
BlackBerry reported record software and services revenue in its fiscal 2018 fourth-quarter results. It reached $218 million, which beat the record set in the previous quarter. Overall, BlackBerry saw software and services revenue rise 14% year over year and generated free cash flow of $47 million. In the fourth quarter, approximately 70% of software and services revenue was recurring.
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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Baidu and Facebook. Tom Gardner owns shares of Baidu and Facebook. The Motley Fool owns shares of Baidu, BlackBerry, and Facebook. Baidu and BlackBerry are recommendations of Stock Advisor Canada.
