The Blackberry stock price is printing higher on Monday helped by the rising momentum in meme stocks. The stock is up by more than 12%, bringing the company’s total market cap to more than $8.8 billion. Its shares have jumped by more than 140% this year.
Meme stocks rally
Blackberry, once a leading phone company, has emerged as a leading player in the so-called meme stocks sector. Today, other meme stocks like AMC, Build a Bear, Naked Brand, and Clover Health have surged by more than 20%. The stocks are also the most popular in social media platforms like Twitter, Reddit, and StockTwits, among others.
For starters, Blackberry is a Canadian company that pivoted to offer cybersecurity services to large companies. It offers United Endpoint Security, United Endpoint Management, Embedded Systems, and Transportation Asset Tracking solutions. It offers these solutions to companies in the finance, healthcare, consumer, and government sectors.
The Blackberry stock price has also jumped as investors move to the cybersecurity sector as the number of hacks surge. In the past few weeks, we have seen hacks in companies like Colonial Pipeline and JBS, among others.
Blackberry’s business has been struggling. The company’s total annual revenue has dropped from more than $1.3 billion in 2017 to more than $893 million in 2020. Its losses have also continued to jump. Blackberry recorded a loss of more than $1.1 billion in 2020.
In its most recent quarterly earnings, Blackberry announced revenue of more than $210 million, down by 27.8% year on year. It also made an EPS of $0.03, which was also a miss.
Most analysts are a bit negative on Blackberry from a valuation standpoint. This is a loss-making company with slowing revenue that is being valued at almost $9 billion. Some analysts like this and this have expressed concerns about the company’s valuation.
Similarly, many Wall Street analysts have avoided rating the company. The most recent forecasts are relatively below the current price. For example, analysts at Canaccord Genuity, Raymond James, Scotiabank, and RBC are relatively negative on the stock.
However, in reality, using traditional valuation metrics on meme stocks has been a losing strategy. For example, value investors who believe that Cinemark is a better investment than AMC have missed out on a major rally. So, what next for Blackberry stock price?
Blackberry stock price analysis
To be fair, conducting technical analysis on a meme stock like Blackberry is a relatively tough thing. Let me give it a try.
Turning to the daily chart, we see that the BB stock price has bounced back after falling in the past two straight days. The shares are about 24% below the highest level last week. Although it is not perfect, the stock seems to be forming what looks like a cup and handle pattern.
Therefore, I can’t rule out a situation where the Blackberry stock price jumps and tests the YTD high at $28, which is about 80% above the current level. However, as I mentioned, this is a company that is relatively hard to predict for now. The key levels to watch are the support and resistance levels at $28 and $12.