Past Performance: BlackBerry (BBRY) reached an intraday high of $18.32 on January 24 of this year, with a closing high just two days prior of $17.90. Those will be key levels to watch as this short squeeze plays out. The prior regime with Research in Motion, now known as BlackBerry, continually ignored the onslaught competitors Google (GOOG), Apple (AAPL), and Samsung (SSNLF.PK) barraged BlackBerry with.
Although BlackBerry was once the only player in the smartphone space, they continually give up market share. In the fourth quarter of 2012 alone, BlackBerry lost two percent market share of the smartphone market. BBRY has finally announced the ghastly long-awaited BlackBerry 10, but even the reviews on the newest product offering haven't been quite what people were expecting.
Fundamentals: Currently, BBRY trades with no P/E as earnings are negative, no forward P/E for the same reason, a P/S of 0.61, and no PEG ratio either. Put simply, BlackBerry just doesn't have positive earnings in the now, nor are they projected to have positive earnings in 52-weeks.
When looking at the assets side of the balance sheet, the picture just isn't pretty. Inventory numbers were higher by 66% from March of 2012 versus February of 2011. Total assets may have increased by a little more than 30% over the past three years, but look at the intangible assets. Intangible assets have increased by nearly 150% in that same time frame, which accounts for 66% of the increase in total assets. Another little problem is the net receivables actually shrank from 2011 to 2012 by about 12%.
The Story: The new BlackBerry Q10 is expected to be released globally sometime in April. There is no question about it, BlackBerry needs this product to be a success. It will be interesting to see just how faithful BlackBerry customers will be considering the specs on the Q10.
The Q10 has a processor and RAM that are already a generation behind. The processor is just a 1.5GHz dual-core, and users can only expect to enjoy 2GB of RAM. To make matters worse, the BlackBerry Q10 is having serious difficulty convincing app developers to write programs for their interface. All of the rumors have BlackBerry's navigation software making Apple Maps feel like a personal guide, and Google has no intent of making Google Maps available on a BlackBerry platform.
How to Play It: BlackBerry's stock has had a successful run since September 24th of last year. BBRY has moved from just $6.37 per share, all the way to $16.00 at the close on Wednesday. The shorts are being squeezed as we speak, and I'd look to add to a short position if the stock approaches the 52-week high again. Force this company to prove that it's worth your investment, make them show a few years without a new phone really didn't hurt BlackBerry's long-term performance. My personal 52-week price target: $11.65.
Disclosure: I am short BBRY.
Additional disclosure: Always consult with your registered financial professional before adding a new position to your portfolio. Investing involves a significant risk of loss, as such never invest more than you can afford to lose.