The shares of BlackBerry (TSX:BB)(NYSE:BB) noticed a large sell-off yesterday, as they fell by 7.2%. It introduced its month-to-date losses to twenty%. Yesterday’s sell-off in BlackBerry inventory got here after a Canaccord Genuity analyst reduce his scores on the inventory.

Earlier than I inform you why the latest sell-off in BlackBerry inventory jogs my memory of Tesla (NASDAQ:TSLA) skeptics, let’s take a more in-depth take a look at what Canaccord’s analyst says about BlackBerry.

Canaccord recommends Promoting BlackBerry inventory

Canaccord Genuity is a Vancouver-based monetary companies agency that makes its income from wealth administration and capital markets segments. Its analyst Michael Walkley yesterday raised his worth goal on BlackBerry inventory to $10 from $8 per share. Nonetheless, the analyst reduce his ranking on the inventory to “Promote” from “Maintain.”

Walkley expects a gradual restoration in BlackBerry’s software program and companies segments. General, he apparently had many optimistic issues to say in regards to the firm’s enhancing development on many fronts in his observe. However he believes its inventory worth has now risen a lot larger than his expectations because of a focused brief squeeze.

Why it jogs my memory of Tesla inventory

Should you’re not new to the inventory market, you most likely already know the surprisingly superb energy Road analysts possess. If an analyst abruptly decides to alter their scores on an organization, it might set off a large sell-off in its inventory — with none vital change in its fundamentals or future development potential.

Elon Musk-led Tesla has been focused by a number of skeptics, bears, short-sellers, and analysts for years. Let me rapidly share the main points of an fascinating associated incident with you. In Might 2019, Tesla was persevering with to ramp up its automobile manufacturing to show worthwhile. Tesla’s inventory worth was buying and selling close to US$200 per share on the time (earlier than its 2020 inventory break up). Abruptly, studies from varied skeptics and bear analysts began making headlines. Morgan Stanley analysts reduce their worst-case goal for Tesla inventory to simply US$10 per share — from US$97 earlier. That month, Tesla inventory tanked by 22%.

Nonetheless, such damaging studies and opinions didn’t change what Tesla was making an attempt to attain. That’s why Tesla inventory has risen by over 2,000% since Might 2019.

BlackBerry inventory is absurdly low-cost

BlackBerry has emerged as an enormous identify within the enterprise safety software program phase in the previous couple of years. The corporate has additionally stepped up its efforts to look past the North American and European markets. Even when I don’t speak about its different segments, in the intervening time, BlackBerry’s rising bets to beneficial properties from electrical automobile (EV) and autonomous automobile expertise might be sufficient to set off a long-term rally in its inventory.

Exponentially rising demand for electrical and autonomous vehicles has attracted tech giants reminiscent of Apple (NASDAQ:AAPL) lately. Apple has secretly been engaged on its electrical and autonomous automobile venture for years. The iPhone is constant to poach many engineers and auto trade specialists from different corporations — together with Tesla — to work on the Apple Automobile venture. This clearly suggests that enormous corporations — together with automakers and tech companies — contemplate EVs and good mobility as one of many key development areas.

BlackBerry already has the sting over the competitors in terms of its choices for the auto trade. Furthermore, the corporate can be persevering with to innovate and develop higher expertise to increase its auto trade choices — particularly for good mobility and EVs.

Silly takeaway

I agree the latest focused short-squeeze episode made BlackBerry inventory extraordinarily unstable. Nonetheless, you’ll be able to’t blame Reddit buying and selling mania for all its 2021 beneficial properties. By doing so, you’ll utterly ignore BB’s not too long ago elevated efforts to profit from the EV and autonomous automobile revolution. Whereas excessive volatility made its inventory dangerous for short-term traders, it shouldn’t prohibit its long-term inventory rally. That’s why you might need to add this low-cost EV inventory to your portfolio earlier than it begins rallying once more.


David Gardner owns shares of Apple and Tesla. Tom Gardner owns shares of Tesla. The Motley Idiot owns shares of and recommends Apple and Tesla. The Motley Idiot recommends BlackBerry and BlackBerry. Idiot contributor Jitendra Parashar has no place in any of the shares talked about.