The solid software sales numbers from BlackBerry (NYSE: BB) gave the stock a post-earnings boost, but that momentum could be at an end. The stock’s valuations are too high to justify holding for the near-term. Unless BlackBerry’s software sales grow at a faster pace, buying and holding the stock may not suit value investors.
BlackBerry did not post anything newsworthy that would encourage investors to buy the stock. On April 3, which is over a month ago, the company extended its lawsuit to include Snap Inc. (NYSE: SNAP). In its patent infringement claim, BlackBerry said that Snap used its mobile messaging technology, diverting customers away from BlackBerry offerings.
The lawsuit is troubling. BlackBerry’s BBM is out of date in the world and Snap is the preferred means for IM (instant messaging) among the youth today. Though SNAP stock is unattractive, likely to fall and stay below the $10 mark, usage among millennial is high. Snap’s only issue is increasing the monetization rate to justify its $13 billion+ valuation.
BlackBerry, at half the valuation, does not have growth in the IM space like Snap does. Facebook (NASDAQ: FB) is also a leader and a giant in this space, with its FB Messenger and with WhatsApp.
Takeaway
BlackBerry should go after the giants in its quest to monetize its patents but the odds of success are very low. Expect BB stock range-bound at best and falling, should traders decide to find another recovery play.
