By Joseph Morrison
What a year it has been for Research in Motion (RIMM). As recently as September 24th, the stock price had cratered at $6.31 per share from the highs of 2012 of $17.57 per share on January 19th, 2012. As RIMM was bottoming out, another smartphone maker was making new highs with Apple (AAPL) at $702.10 per share in September. The stock price at that time reflected exactly the mood surrounding the two firms. Apple was going to be the first trillion-dollar company, and the days where carrying a BlackBerry meant something were ancient history.
In the short span from September 2012 to January 2013, a lot has changed. Apple has shown signs of weakness by giving up market share to Samsung as well as the fiasco surrounding Apple Maps. As a stock, Apple's stock took a hit from the impending increase on capital gains tax from 15% to 20% of the "Fiscal Cliff" and investors have taken profits from Apple's meteoric rise. Now, the main talk surrounding Apple is whether this is a buying opportunity and whether the "Death Cross" is a technical signal of larger troubles for this tech giant.
Research in Motion, however, has been mounting a comeback. The BlackBerry maker has been systematically drumming up excitement for the new BlackBerry 10 and the stock has responded. The stock has come off the bottom and has recovered to the current level of $11.49 as of 1/9/13. This price movement is certainly not based upon enthusiasm for RIMM's 2012, which has been less than stellar. The company dipped into negative EPS during the period ending 5/12 which was a massive downside surprise of -$0.37 reported versus -$0.05 expected. On RIMM's most recent earnings call, RIMM reported a -$0.22 upside surprise and the market reacted in an underwhelmed fashion with the stock taking a dip from the $14.12 mark which it had before earnings. The earnings were a footnote to the main theme of the call, however. The BlackBerry 10 was the main talking point for CEO Thorsten Heins and the excitement within the firm is palpable.
A successful rollout of the Blackberry 10 is the best shot to get back into the game and start bringing the cachet back to the brand. A good indicator that the Blackberry 10 is a quality product is that RIMM will another chance with the United States Immigration and Customs Enforcement (ICE). ICE has decided to test the Blackberry 10 for its agents. This agency has moved away from the Blackberry to the iPhone and if RIMM can grab this segment back, it could say a lot for this product. Additionally, there has been excitement surrounding the pre-release testing for enterprise users of the Blackberry 10. This is the major market segment that RIMM needs to capture to get fully back. Blackberry was built strongly on business users and in order for RIMM to get back to where it was, it needs to recapture this market.
We will now look at the chart to determine where the price will go with a successful rollout of BlackBerry 10:
Looking at the daily chart, we see that the stock has gapped down since the earnings report and has found support around the current level and has been trading mostly sideways since. Right now this stock is trading in a range between two gaps, the gap up on 11/23/12 and the gap down on 12/21/12. As the release date draws nearer, the market will move in the direction of the performance it is expecting from the Blackberry 10. A successful rollout will have the stock fill the gap up and it will reach back towards the highs and will see resistance around the $17.00 level, the highs of 2012. If the rollout is unsuccessful or reveals problems, I look for this stock to fill the gap down and go back towards the lows and find support around the $6.00 level.
Research in Motion is in a great position with the pending launch of the BlackBerry 10 and all of the hype surrounding it. This launch is the big news that the market is focused on and this stock is poised to pop even more with the pending BlackBerry 10 release.
Additional disclosure: Business relationship disclosure: The article has been written by Wall Street Trading, a group of junior market analysts. Wall Street Trading is not receiving compensation for it (other than from Seeking Alpha). Wall Street Trading has no business relationship with any company whose stock is mentioned in this article.