CEO John Chen considers BlackBerry shares to be undervalued. Is he right ?
Blackberry (BB) – Get BlackBerry Limited Report, the Canadian cybersecurity company, recently announced updates related to its activities and future plans.
Just before CES 2022 (CES, the Consumer Electronics Show, is an annual and hugely influential tech show based in Las Vegas), CEO John Chen was interviewed by CNBC. Asked about BlackBerry’s stock price hovering around the $10 mark, well below its peak of $25 per share a year ago, Chen said he thought BB was undervalued. .
Let’s take a closer look at the CEO’s answers and determine whether or not he’s right about BB’s potential.
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BlackBerry announcements at CES 2022
Considered by many to be an important catalyst for BlackBerry in 2022, the company’s participation in the CES 2022 event allowed it to offer public demonstrations of some of its new technologies. This technology included BlackBerry’s IVY and QNX and its Jarvis update. The company also got a platform to expand its partnerships with China.
The market, however, showed little enthusiasm for BlackBerry’s recent developments. Shares fell 5% before the start of CES 2022 on Jan. 5, but quickly recouped most of those losses, rising 4% after the event ended. Those hoping for a meteoric rise during or immediately after CES have surely been disappointed.
Perhaps BlackBerry’s biggest buzz was around its first public display of the BlackBerry IVY (developed in partnership with Amazon AWS), which was paired with BlackBerry’s QNX software in a Jaguar I-PACE. The applications of these combined systems are many and varied; some of the most exciting potential uses are in the automotive industry, where these systems could help vehicles quickly exchange data with a “smart city” environment.
New updates to BlackBerry Jarvis 2.0, which now offers a comprehensive software suite to simplify regulatory compliance and secure software supply chains, were also on display. You can watch a brief video of the BlackBerry booth at CES 2022 below.
Is Mr. Chen right?
Ahead of CES 2022, CEO John Chen was interviewed by CNBC about the recent announcements and updates that would be showcased at the event. During the interview, the CEO was very excited about the company’s recent technological advancements in cybersecurity and software. Asked if BlackBerry stock was $10, the CEO replied:
“Obviously, as we run the business, we feel undervalued. There is a lot of potential in our action [BB stock] and we need to show some revenue growth. But we’re positioning ourselves in cybersecurity, the automotive industry, embedded software, I think, and hopefully that’s a long-term rewarding stock for shareholders.”
Chen also mentioned that the new BlackBerry, which focused on cybersecurity and software development, is now in a much wider market than the old BlackBerry, which focused on hardware and smart phones. Being a smaller fish in a bigger pond, the company now has to make bigger and better achievements.
According to data from third-party research companies, the global cybersecurity market will be worth $346 billion over the next five years with a CAGR of 13.4%. Meanwhile, Automotive Software Market was valued at USD 16.46 Billion in 2020 but is projected to reach USD 66.81 Billion by 2031, registering a CAGR of 13.4% from 2020 to 2027.
BlackBerry, taking advantage of the growth of these emerging industries, has a real chance to take advantage of this and grow in the near future – it currently has contracts with more than 45 automotive OEMs and its technology is already present in 25 platforms. of electric vehicles which, cumulatively, are used by more than 195 million vehicles on the road today.
The bottom line
Some optimistic investors may consider BlackBerry to be cheap for a growth stock at current levels. Others, however, think that even assuming significant growth over the next few years, a $10 per share price for BB is too rich.
Although BlackBerry is now competing in several markets with excellent growth prospects over the next five years, the company must demonstrate that it is able to generate consistent revenues with its new technologies – until then it is still too early to say whether it is fairly valued. .
Wall Street is bearish on BB, holding a “moderate sell” consensus and a price target of $7.75 for the next twelve months. This objective largely stems from the company’s disappointing revenue generation. Much of the stock’s high volatility was driven more by meme appeal than shifting valuation views. Still, it’s possible that Wall Street is overlooking BB’s real, non-mean, long-term growth potential.
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(Disclaimer: This is not investment advice. The author may own one or more stocks mentioned in this report. Additionally, the article may contain affiliate links. These partnerships do not do not influence editorial content. Please support the Wall Street Memes)