Retail investors using Reddit’s r/wallstreetbets have found their next meme stock after AMC and GME, but should you buy Blackberry stock?
Move over AMC (NYSE: AMC) and GameStop (NYSE: GME), there’s a new hyped stock that has captured the attention of the r/wallstreetbets community — Blackberry (NYSE: BB). The smartphone maker, which sold some of the most popular models before the iPhone exploded, has seen a surge of interest in the stock from retail investors over the past few months.
In a bid to stick it to short-sellers, many of whom are wealthy hedge funds, Redditors have been driving up the share price of companies that have a lot of their shares sold short, in the hopes that these sellers lose a lot of money.
What is Blackberry?
Blackberry is a Canadian company that specializes in enterprise software and the Internet of things.
In the early ’00s, Blackberry was famous for being the company behind an iconic line of pagers and smartphones.
How has Blackberry stock performed?
When Blackberry’s phones were the go-to choice, its shares were trading around $100, reaching an all-time high of $147.55 in 2008. However, the company was muscled out of the mobile space by giants Apple and Google’s Android in the 2010’s so it switched its business model and began to focus on creating enterprise software. In 2012, shares fell to $12 and they struggled to gain momentum for the next few years.
Now, the company is receiving attention again thanks to the social media frenzy centered around the stock. In January, Blackberry shares jumped to a multi-year high of over $25 before falling back into single digits in March.
Blackberry stock is up 140% year-to-date. Yet, these gains are nothing compared to other meme stocks. GameStop is up 1,523% and AMC has gained 2,636% in the same time period, both of which could join the Russell 1000 Small Cap Index by the end of June.
However, interest in Blackberry is growing. If we look at the top 20 posts on r/wallstreetbets from Monday we see that seven are dedicated to the company.
Is Blackberry a good investment?
Blackberry stock is on the rise mainly due to the meme stock craze, yet many believe we shouldn’t write the company off completely. The firm has just come off a great 2020, in which it announced a big partnership with Amazon Web Services which resulted in the launch of BlackBerry IVY, an automobile software that may revolutionize the space. Many also expect the company to take a position in the EV industry.
We must remember that investing in meme stocks is still risky as they are very volatile. The logic driving up Blackberry’s share price is based on hype instead of sound investment reasoning. To make this company a more attractive investment, we will need to see Blackberry actually make moves to enter the automobile industry. Before that, we would recommend investors to trade with caution and allow its share price to come in line with its financial fundamentals.
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