Financial Trading Blog
Stock of the day 23/03/2016 – Blackberry Ltd
Once a smartphone giant Blackberry has increasingly gone the way of the landline, ceding ground to the omnipresent duo of Apple and Samsung. 2015 saw it continue to struggle, falling from an opening price of $11.02 (bear in mind that’s already down from $145 in the middle of 2008) to the $7.50s by the start of December, with a brief trip below $6 in the aftermath of Black Monday in between.
Yet things began to pick up as 2015 came to a close after Blackberry posted a still troublesome, but better than expected, set of third quarter figures. Whilst revenue fell 31% year-on-year to $548 million that is still a 12% increase quarter-on-quarter, the first time the company has seen such a rise in nearly 2 years. There was good news elsewhere; losses shrank to $89 million from $148 million, whilst revenue from software, an increasingly important area for Blackberry, more than doubled to $162 million. Information surrounding its recently launched Priv smartphone, the first to run on the Android operating system, was less promising, with sales dropping off by 100,000 quarter-on-quarter to a mere 700,000.
(Source: IT-Finance.com 23/03/2016)
All in all investors were suitably impressed by Blackberry’s Q3 report, lifting the stock to a 5 and a half month high of $9.29 by the end of 2015. However, things quickly turned sour at the start of 2016; falling nearly 25% in the first 2 weeks of the year Blackberry was back at lows it hadn’t see since it began to recover from the impact of Black Monday in August. The stock remained below $7 all the way into mid-February, before creeping higher as March got underway. It now sits at a current trading price of $7.93 (IT-Finance.com, 23/03/2016).
In terms of its fourth quarter figures next week the success of Priv, which has had enough time to establish its presence in the smartphone market, likely will dictate the post-earnings reaction from investors, each 100,000 sold potentially adding $30-35 million in revenue.
Blackberry Ltd has a consensus rating of ‘Hold’ with an average target price of $8.40.
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