When BlackBerry Limited (NASDAQ:BBRY) CEO John Chen took over the helm of this troubled smartphone-maker nearly two years ago, there was big market excitement, imagining a magical turnaround on the horizon. Of course, to achieve his goals, Chen had to deal with the massive onslaught from Apple Inc. (NASDAQ:AAPL) in the fight to commandeer the smartphone market.
BlackBerry Stock’s Attempted Comeback
Now as we approach the two-year anniversary of Chen’s stewardship, the price of BlackBerry stock is currently only slightly higher than when he took command. The BBRY share price did vault higher to $12.63 in January 2014 after news surfaced that the company had received indication of takeover interest from a Chinese company, but that was subsequently squashed.
In the nearly two years since, Chen has struggled to make BlackBerry relevant again, unable to fight the massive success of the Apple “iPhone,” which sold 169 million units in 2014 and is on pace to easily surpass that this year. (Source: Statista.) Consider that AAPL sold a mere 1.39 million units in 2007 when BlackBerry was still relevant.
Just look at the comparative stock performance since the debut of the iPhone in 2007.
Chart courtesy of www.StockCharts.com
Is BlackBerry Worth a Trade?
For traders, there is clearly an aggressive stock or option trading opportunity in BlackBerry, especially if you believe Chen can repeat the magic he performed when he took over a distressed Sybase in 1998. He managed to make the company relevant, and sold it for $5.8 billion or over six times the value when he assumed control.
Now, while the two situations—Sybase and BlackBerry—are similar in some respects, a major difference is that Sybase didn’t really have to deal with the likes of Apple.
In eight years, AAPL has proven that it’s the company to beat in smartphones. Samsung has found this out. So have Nokia Corporation (NYSE:NOK), Motorola, and Microsoft Corporation (NASDAQ:MSFT). It’s an upward battle and I simply don’t see any major threats to Apple’s dominance with the iPhone at this juncture.
The Apple iPhone is considered the must-have smartphone for the trendy. Even in China, where Apple was a latecomer (but has quickly become a major player), buyers are still willing to fork over the average of one month’s salary to buy an iPhone rather buy the cheaper Chinese-made Xiaomi smartphones.
Chen’s latest foray with the soon-to-be-launched “Android”-powered “Priv” smartphone appears to be his last ditch attempt at the hardware business to regain some market share from Apple and other Android phones.
BlackBerry’s share price has been edging higher on the news after positive reviews on the Priv smartphone, which could help Chen regain some much-needed sales.
The widely held view is that Chen is looking for BlackBerry sales to vault to five million annually, up from the approximately 3.2 million annualized, or he will shut down the hardware side and focus solely on software, which is also trying to find its soft spot.
The obvious trading strategy would be to long Apple and short BlackBerry via stock or option positions, unless you really believe in Chen’s vision to make the company relevant again. It could go either way, but we will know by 2016 where Chen is heading.