Yesterday marked the day that BlackBerry 10 finally hit phone retailers. The hype train has been unstoppable for the last month; Research in Motion (RIMM) (now known as BlackBerry) stock became more and more volatile the closer we got to the launch date, creeping up all throughout January. On January 30th the volume hit record levels, reaching 141.11 million compared to a 59.89 million average.
(Source: Google Finance)
While the stock has been steadily appreciating over the course of January, it dropped 6% yesterday. Institutional investors have been mulling over this stock for eons, and several firms, including Goldman Sachs, have upgraded it to a "buy". What's interesting to note, however, is that on this certain day people took millions of shares of Research in Motion and ran.
Evidently, people are jumping off the bandwagon. What was long heralded as the second coming of BlackBerry has been overwhelmed by a loss of confidence on the day the ball really got rolling: investors rode the upswing and cashed out. BlackBerry faces a myriad of challenges in the coming months. Ovum chief telecom analyst Jan Dawson has addressed some of these problems: BlackBerry has long done business with enterprises, which actually constituted the bulk of their purchases. Enterprises are no longer the primary purchasers of smartphones, however. A lot of companies are also opting for a "bring your own device" policy in order to cut costs. Both of these clearly identifiable trends bode poorly for BlackBerry.
Wall Street doesn't think RIMM will perform. UBS thinks the stock will fall to $9.50. Merrill Lynch thinks the stock will bottom out at $7. Analysts at Citigroup posted a price estimate of $6. The only exception is Goldman Sachs: the stock continued to gain momentum after Goldman upgraded it to a "buy" rating on November 29, 2012. Wall Street doesn't always play by the rules, however: a quick look at stock ownership shows that Goldman is not long RIMM, and may even be shorting it. The finance industry has no confidence in RIMM, a complete turnaround from the days when every banker had a BlackBerry in his pocket.
Confidence is low across the board, and Goldman wants your money. A stock's value, especially in the technology sector, is never based simply on how well the company is performing: investor confidence is key. And investor confidence is non-existent; this week many "bulls" showed their true color. Best to get out now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.