BlackBerry Ltd.: Why Now May Be the Time to Take Profits Off the Table

Over the past three months, BlackBerry Ltd. (TSX:BB)(NYSE:BBRY) has done exceptionally well, posting gains of more than 50% over this time span. Since hitting a high of $15.82 per share early this month after a contrarian report was published by Citron Research’s Andrew Left citing a 24-month $20 U.S. price target (when the stock was trading around $10 U.S. per share), the company’s stock has come back down to earth, trading closing last week at sub-$14 per share.

The hype surrounding BlackBerry stock centres on the company’s newfound autonomous vehicle testing hub for BlackBerry’s QNX software program. The QNX platform is one of only a few software platforms with a significant install base – at the time of Citron’s report, Mr. Left had calculated that the install base was close to 60 million vehicles – a significant number.

The theory behind the bullish outlook on BlackBerry follows the logic that as autonomous vehicles become a bigger and bigger percentage of the overall car market, the software underpinning these cars is likely to become more and more profitable. As the company’s QNX software already has a significant foothold in this industry, BlackBerry could be well-positioned to be taken over, or become profitable, or both, in a reasonable time frame, say, 24 months.

Looking at the numbers and the analysis from Citron, I am taking these predictions with a grain of salt; seeing as BlackBerry’s stock price has appreciated substantially over the past few months, I would recommend investors take a look at perhaps taking some money off the table and buying the stock back at a lower price, as the long-term upside may be overshadowed by near-term headwinds with investors cashing out at the same time.

Invest wisely, my friends.