Investors of BlackBerry Limited (NASDAQ:BBRY) stock saw some decent gains from October to December of 2015. As the New Year starts, however, BBRY stock tumbled alongside the U.S. stock market. With the company switching gears with “Android”-powered phones and software services, BlackBerry stock could have serious upside potential in 2016.
BBRY Stock: V-Shaped Recovery
As you can see from the chart, the BBRY stock price started to decline since May 2015, but has found a bottom in October. Since then, it went on a V-shaped recovery until the beginning of this year, when the U.S. stock market turned to risk-off mode due to factors such as China’s stock market crash.
Turning to risk-off mode in the beginning of 2016 has brought down a lot of hot stocks. For instance, Apple Inc. (NASDAQ:AAPL) is now trading at below $100.00 a share, while Amazon.com, Inc. (NASDAQ:AMZN) has shed 8.6% since entering the New Year. BlackBerry’s drop could reflect the sell-off efforts in the U.S. stock market at the moment, but if good news were to hit the company, its stock price could go on a nice recovery, like the one a few months ago.
The declining market share of BlackBerry’s proprietary mobile operating system (OS) has been a long-term problem for the company. In the second quarter of 2015, BlackBerry’s OS only had 0.3% of market share. (Source: “Smartphone OS Market Share, 2015 Q2,” International Data Corporation, last accessed January 12, 2016.)
Chart courtesy of www.StockCharts.com
Fortunately, the company decided to make the switch. In November of last year, BlackBerry launched its first-ever Android smartphone, the “BlackBerry Priv.” It is a slider phone featuring a dual-curved, all-touch display and BlackBerry’s signature full QWERTY keyboard.
The BlackBerry Priv has received many positive reviews since launch. It is essentially an Android phone, so it’s easy to use and you get all the great apps. Moreover, it is a BlackBerry, so it comes with the company’s robust security features and a physical keyboard.
Of course, it’s the sales figures that matter the most for investors. Although BlackBerry has yet to announce the official results, company CEO John Chen said that sales of the Priv were “so far, so good” at this year’s Consumer Electronics Show (CES 2016) in Las Vegas. (Source: “BlackBerry Going All-in on Android Phones,” CNET, January 6, 2016.)
Note that the BlackBerry Priv previously had a 60-day exclusive deal with AT&T Inc. (NYSE:T). Now it is also available at Verizon Communications Inc. (NYSE:VZ), T-Mobile US Inc (NYSE:TMUS), and Sprint Corporation (NYSE:S). More carriers could bring more consumers to the company’s first-ever Android smartphone.
By the way, the company is not satisfied with just one Android phone. At CES 2016, John Chen also said that BlackBerry plans to release one or two new Android phones in 2016. So in the future, instead of choosing between Samsung, LG, or HTC, Android lovers will have the option of more BlackBerry smartphones as well.
The Bottom Line on BBRY Stock
Other than its hardware business, BlackBerry’s software business could continue to impress investors in 2016. Note that in its last earnings report, BlackBerry’s non-GAAP software and services revenue surged 183% year-over-year and 119% quarter-over-quarter. (Source: “BlackBerry Announces Third Quarter Fiscal 2016 Results,” BlackBerry Limited, December 18, 2015.)
The neat thing is that around 70% of BlackBerry’s third-quarter software revenue was recurring, adding stability to the company’s future business. Moreover, software services do not face the same product update cycle as hardware products.
With growth strong on the software side and new strategies on the hardware side, 2016 could indeed be a very interesting year for BBRY stock.