Blackberry stock (NYSE:BB) slipped below $5 per share during trading hours, falling almost 2% as the security company’s problems persisted.
Blackberry (NYSE:BB) continues to suffer with its SaaS and cybersecurity businesses, but the IoT sector continues to develop relatively quickly, offsetting revenue decreases elsewhere. The company’s management has stated that it would continue to concentrate on the IoT market, which is unexpected given that Blackberry was once one of the most desired cyber security businesses but is now progressively being disregarded by companies such as Crowdstrike (Nasdaq:CRWD). Issues from the previous quarter linger, but overall results were better, and some green shoots for the security and IoT startup have started to emerge.
Blackberry IoT thrives, but Cybersecurity Remains a Challenge.
Management has predicted that IoT revenue would be about $200-$210 million in the fiscal year 2023. The future looks bright with many automobile manufacturers, notably Volkswagen, embracing the key IoT software platform QNX. QNX is already incorporated in seven of China’s ten major OEMs, and the business is optimistic that IoT will be the backbone of Blackberry’s income in the future. The good news is that if the IoT business becomes a more significant part of sales, the firm’s gross margins are projected to rise to approximately 70%, pushing the company closer to profitability, which investors will seek before resuming their investment in the stock.
Market Analysis of Blackberry Stock
The business continues to lose money in the quarter, with GAAP profits per share of 9 cents. Investors will be frustrated that Blackberry has yet to generate a profit despite reasonably strong margins. Many would question managerial ability in light of the lack of return on investment in research and development that has gone into the different company divisions. Despite the losses, the firm is well financed, with $432 million in cash and cash equivalents on its books at the moment. However, investors will be concerned about the negative free cash flow, which comes in at -$23 million.
Blackberry’s revenue is predicted to improve by 15-20% in 2023, but it remains to be seen if IoT and QNX can bring in enough customers to get the business back on track to long-term growth and out of its present rut.
Analysts’ price targets for Blackberry stock (NYSE:BB) have continued to fall, and the average analyst goal now stands at roughly $8 per share, with most analysts suggesting a ‘hold’ recommendation. However, the market is unlikely to return the stock to those levels until management shows signs of a turnaround.
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