Justin (00:00): In this video, I will give you a detailed breakdown of the BlackBerry stock, and I'm going to provide you with both my analysis and a 12-month price prediction on the BlackBerry stock. So, Blackberry is best known for its brand of interactive pages, smartphones and tablets back in the day. However, under the changing market conditions, it transitioned into an enterprise software and services company. And if you thought BlackBerry was dead, along came Reddit, and a group of organised retail investors, under the subreddit Wall Street Bets to rescue and shine a light on this dinosaur stock. Now, I won't go into too much detail on the whole retail investor versus hedge fund saga. Instead, I want to provide you with some solid, basic, fundamental analysis. Before we continue, please do me a huge favour and hit the Like button below this video now. This helps me rank these videos on YouTube, and every single like really does help me. So please, please click on that Like button now.
(01:04): Okay, so let's jump into the stock quickly and let's have a look at Blackberry. So, currently trading at 14 bucks and some change, we can see they have a market cap of 8.71 billion. I also like to jump into the statistics quickly when I'm over here at Yahoo Finance, and besides having a look at the market cap, I like to have a look at the P.E. ratio. As you can see, the P.E. ratio currently sitting at 97, which is exceptionally high, which means that the stock price is very much driven by sentiment and that investors are indeed overpaying on the value. So, another thing I like to have a look at while I'm here is, I have wanted to have a look at the dividends situation. As we can see, there's no dividend pay-out on the stock. So that's something to factor in. Next, I like to head over to the financials, and specifically, I want to take a look at the balance sheet before anything else. I'm looking for the ratio between assets and liabilities, and I'm looking to make sure that there is equity in the company. In other words, they have a higher rate of assets than they do liabilities, and this is really a key component, and we want to make sure that there is some sort of consistency over the last three years of reporting. The next thing I want to do is jump in and look at the cash flow statement. We're looking at specifically operating cash flow. I want to see the money that's being generated, specifically out of operations. So, we're not looking at anything involving financing or stocks or anything in that regard. And then also what we want to have a look at is capital expenditure, and very specifically, between these two ratios, we want to look at operating cash flow, less capital expenditure, which gives us our free cash flow. Free cash flow is something that I place a lot of emphasis on when I am looking at stocks and evaluating whether they're worth investing in. The other thing I like to have a look at is the income statement. And I just want to go over the total revenues quickly. I want to look at the gross profits, etc., and just basically make sure that there is some sort of consistency in terms of growth over the last three years. Anything that shows inconsistency I would be marking down in terms of my evaluations.
(03:26): So, I have a spreadsheet that I use to evaluate the shares, and I have 12 key points on here that I look for, which helps me determine whether this is a buy or sell or hold. So essentially, the first thing I'm looking at is the P.E. ratio. We want it to be below 25. Anything higher than that, starting to indicate that there's a lot of market sentiment 97.53 tells you that the stock is 100% sentiment-driven at the moment. It’s not even a debate. Unfortunately, profit margins for Blackberry don't meet the criteria for 10% plus, in fact. They’re in negative margins at the moment, which’s a big problem. They do have greater assets and liabilities, so they get a mark for that. Total revenue is up for more than three years in a row. They get a mark for that. Gross profit is up for more than three years in a row, so again, scoring very good in those areas. If we go look at operating income, however, there is inconsistency over the last three years. If we have a look at net income, there is inconsistency in the previous three years.
(04:30): And then, if we have a look at cash from operating activities which is a really critical component. That means that they're actually getting paid for the primary product or service. That is also inconsistent over the last three years, and free cash flow growth just is inconsistent and has not been there in their books for the previous three years, so big problem. They score positively on the number of shares going down. There has been a little bit of a buyback, so that's a positive sign on the one hand. And then the other thing that I like to look at is the cost of dividend to the company. Now, obviously, Blackberry doesn't pay out a dividend. So, by default, they're getting a net criteria score here, but let's just keep in mind that they actually don't have a dividend pay-out. And then the other thing I want to have a look at is to make sure that the share price has at least doubled in the last decade. 10 years is a really long time for a share to have matured, and they should have at least double the price considering the market conditions of the last 10 years. So, if we go back here quickly to Yahoo Finance, and we just go and have a look at the charts for the last decade, what we will see is that Blackberry has come off a high in 2008, 2009 of $116, and they've plummeted, all the way down to 14 bucks. So, you know, the stock is more than halved over that time. So it's lost a tremendous amount of money, a tremendous amount of value. So, if I were advising on the stock, I would go, and I would say to anyone be very cautious. So on my score sheet. I have a 41% buy score; I have a 58% Sell score. So certainly, I know that because there is a lot of controversy around retail investors versus hedge funds and the retail guys under the subreddits Wall Street Bet is really trying to stick it to the hedge funds and so, I have no doubt that this price is going to go up in the short term, I have no doubt that the price is going to be very unreasonable. There’s going to be an incredible rally behind the stock. And as many other mean stocks that Wall Street Bets has put out.
(06:56): I think the one thing I have to say to everybody is, be extremely cautious. This is a speculation play. If you decide to go in on BlackBerry, please understand that anything above the current price is speculation. In fact, the industry experts recommend that the price should be about 8 bucks a share. At 8 bucks 12 and I think based on the actual fundamental value of the company, this is probably a reasonable and fair assessment of what the price should be. Now that having been said, I don't want to be accused of being a suit. I don't want to be accused of driving any kind of agenda. But I must tell you that if you are going to buy the stock, it is speculation. Don't bet your rent money on it, don't bet the house money on it. And, you know, have a little bit of fun with it, by all means, but understand that you are going into speculative buy, and it is with that in mind that I'd like to leave you with a final thought. Blackberry has failed to pivot itself over the years in any significant way. And so if you are taking a long position on this, you're probably going to lose money.
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