Is This "Reddit Stock" Still a Buy?

BB was a participant in the Reddit-fueled trading mania

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Tech icon BlackBerry Limited (NYSE:BB) recently experienced an insane amount of volatility after it got caught up in the GameStop (GME) and r/WallStreetBets frenzy. At its 52-week high, BlackBerry stock reached $28.77. BlackBerry stock has since fallen back to the $10 level. So how should investors proceed? 

From a fundamental perspective, BlackBerry has very few redeeming qualities and is still far off from being worth its current valuation. The company’s forward price-earnings ratio of 54.35 doesn’t necessarily offer the best return, and its revenues have overall lacked consistency. In the past 12 months, BlackBerry’s sales have dropped $75 million from what was reported for fiscal 2020 and now stand at $965 million. In addition, the company’s net income has been on a constant decline, losing $1.235 billion since 2018. Its net losses now stand at $830 million.

However, BlackBerry does boast a decent balance sheet with $674 million in cash and cash equivalents, giving the company some room to potentially turn things around.

Plus, there's plenty of pessimism built into BB -- which is partially why it was blitzed by the Reddit army. All six of the analyst in coverage rate the stock a "hold" or "strong sell," while short interest increased by 58% in the most recent reporting period. 

One thing's for sure; options are an intriguing route, regardless of direction. The security's Schaeffer's Volatility Index (SVI) of 128% sits in the relatively low 19th percentile of its annual range. This means options traders are pricing in relatively low volatility expectations. 

 

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