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Ignore All The Hype Around BlackBerry Ltd (BBRY) Stock

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EMM & QNX will be the growth drivers going forward. But the risks in BlackBerry Ltd (NASDAQ:BBRY) stock continue to remain elevated.

– Blackberry definitely seems to have a first mover advantage with its self-driving software.

– The company, despite huge software growth & the licensing of mobile devices, does not have competitive advantages.

– Blackberry has been nimbler in recent years especially in areas such as QNX.

BlackBerry Ltd (NASDAQ:BBRY) stock is a very volatile stock. When the company announced its latest set of earnings on the 20th of December, the share price rose to around $8 a share, but since then has plummeted back down to the $7 level. Blackberry is unique in that it is a low priced stock but is just as liquid as many of its peers. This combined with the volatility of the tech sector attracts all types of investors and traders as volatility is a guarantee (which we have obviously seen over the past week or so).

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Svetlana Dikhtyareva / Shutterstock.com

BlackBerry’s latest fiscal third quarter was definitely a mixed bag. On one hand, you had aggressive margin expansion and a surprising profitable quarter on a non-GAAP basis, but on the other hand, top line came in $20 million short of what was expected. A return to revenue growth is expected next year with enterprise software & QNX probably leading the way. Blackberry and its investors know that if this company can comprehensively combine these areas as well as its security wing to work cohesively in the emerging Internet Of Things market (IoT), then this company will have a strategic competitive advantage. Blackberry’s pivot from hardware to software may have been well timed but I would still recommend caution. Here are three reasons to back up my case.

Also Read: Should You Buy BlackBerry Stock After The Latest Earnings Beat?

Blackberry Will Want Quick Adoption Of Self-Driving Cars. Will It Happen?

Billions of dollars are presently being pumped into the self-driving car industry and Blackberry definitely wants a large piece of that pie. The race is definitely on and Blackberry has stated its intentions to lead by announcing a $75 million testing hub (which will mainly employ engineers) in Ottawa. Blackberry has already hooked up with Ford to develop car software (1) but investors should be aware of some possible headwinds here. In my opinion, the speed of adoption will be crucial. Basically, Blackberry and the likes of Ford on the automobile side are hoping that this technology will become mainstream quickly, but I have major doubts. Quick adoption means Blackberry can leverage its efforts and tie up with many auto manufacturers (as it will have a first mover advantage) to see a strong return on its investment.

QNX Will Need Major Upgrades

Firstly, you can expect that Blackberry’s tech competitors (such as Alphabet Inc (NASDAQ:GOOGL) & Apple Inc. (NASDAQ:AAPL)) would close the gap if this technology doesn’t get approved in the near term. The likes of Apple could continually invest in this area for decades without overly impairing its balance sheet. Blackberry can’t. Blackberry’s bet is that its QNX will go mainstream in the near term and due to the volumes involved, it would really drop the cost of the technology over time. The company is already working with 40 automobile manufacturers. The natural transition is for its present infotainment system software to include robust autonomous driving technology. That all looks good on the surface but the speed at which the company can get its product in cars on mass will dictate whether QNX will take off or not.

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