BlackBerry (BB) is not overlooked

A quick rant about BlackBerry DD that I see on WSB constantly. No, BB is not overlooked and yes investors know it's not a phone company anymore.

This is a quick rant that I wrote back when I was doing the GUH Daily Recap. It was in my drafts the whole time and never posted it. So here it is. This weekend, I will do the GUH Weekly Recap which will be the same formula and same length except in a weekly basis instead of a daily one. Also, I’ll try to make 2 long form posts a month but this will really depend on my schedule. Anyway, enjoy this rant about BB that I will not post on WSB for obvious reasons!

I'm sick of hearing about Blackberry and I know I'm going to get some hate on this. I just want people to understand why this stock is trading at a discount. So here are a few points on why Blackberry is not an overlooked buying opportunity that some pumpers might make you think so :

Their phone business has been dying for years because they didn't move with the time and instead of following the smartphone trend they kept making the smae phones and repetitively said that smartphones were just a fad. But here's the thing : their core idea (and unique selling point for younger people), having a keyboard, was a good feature back when touchscreens sucked (it was basically 2 screens very close to each other, when you pressed it, the 2 screens would touch around the place you pressed and that's how the phone knew you touched it) but touchscreens got way better over the years making a physical keyboard useless. Now that we switched to capacitive touchscreens (that detects electric conductors like your hand for example), touchscreens are much MUCH more accurate and we can type much faster. Also, autocorrect is much better now so even if you mistype, your autocorrect will be pretty ducking good at figuring out what you wanted to say. ;)

When they saw that their phone business was dying and realized they couldn't fight the smartphone trend anymore, they switched to smartphones but it was way too late and there were a lot of good players already. But the game was not completely over, people still wanted to like their smartphones, so they just needed to make a good smartphone and they could make their big comeback. Except when they switched, they decided to use their own Blackberry OS. Nobody wanted to use it and no developper wanted to make apps for it. People got really disappointed and no longer expected anything from Backberry anymore. And then, when FINALLY they switched to Android, it was already too late and nobody cared about Blackberry anymore because it's been so many years now that younger people no longer care about it.

Now, the great thing about their phones back when they were the kings was that it appealed to younger people and CEOs, politicians and executives because their blackberry phones were famous for being really secure. But they didn't hop on the smartphone trend early enough and all of them switched to Iphones because Apple is really good at cybersecurity and keeping your data safe and they were making killer phones.

So now that their 2 core targets no longer wanted to have anything to do with their phones, Blackberry decided to pursue their cybersecurity division because of the good reputation that they once had. Except, now they've spent about a decade doing so, they have made a lot of products but their revenue still sucks.

If their revenue sucks, that's because they're on highly competitive sectors (IoT and software) with a lot of young startups as competitors. That old phone manufacturer is not in its element and it shows.

Also, what doesn't help is that they seem to be all over the place : when I said IoT and software, this is not because I don't know what they're developping, it's because they have so many vastly different products that there's no clear big revenue stream anymore. Even cybersecurity that should be their thing is not generating a big portion of their revenue (BlackBerry Cylance, they antivirus product line accounted for around 15% of their revenue in 2019), the rest is from their IoT products (52%) and licensing (31.5%).

Furthermore, revenue has been stagnant for 10 years and they still operate at a loss after all those years. They spend more on sales and marketing than on R&D and yet they can't seem to sell their product that well. What's scary for them is that they need to grow their client base and their revenue just to survive as a company and nothing shows that they will ever be able to do that. Actually, everything shows the complete opposite.

So, in conclusion, if you're investing in Blackberry, that's the company you're investing in : an old phone company that jumps on trends way too late with subpar products and as soon as they have a successful product, they don't change the recipe even when it clearly no longer works (just like they did with their phone division and just like they're doing right now with IoT).

So, no, you're not investing in a big buying opportunity and don't think it's been overlooked either : It has an average daily volume of 30M shares and even before October 2020 (so way before that whole "social media fenzy") it was still trading 10M shares daily. People know about Blackberry, investors DEFINITELY KNOW that it’s not longer a phone company, they've analyzed the business much more than you’ve ever had but investors stopped believing in the company because they still don't have a good reliable revenue stream even when their company's survival is at stake.