RBC Downgrades Blackberry Stock Following Reddit-Inspired Frenzy

Following what has been a historic speculative frenzy driven by retail investors posting on a popular subreddit forum called WallStreetBets, the nearly-obsolete retailer GameStop has seen its value soar by as much as 400% since the beginning of the year. As of Tuesday, the rally appears to have continued, as day traders wage war on institutional short-sellers, taking with them several other once-fruitful names, including Blackberry and Nokia.

Blackberry has also been the subject of a surging price rally following the retail investor collaboration on Reddit, as the company’s stock soared to over $20 Tuesday morning. Despite what appears to be dedicated perseverance among the WallStreetBets community, which has even backed major short-seller Andrew Left into a corner, it appears that RBC Capital Markets continues to hold a pessimistic view on the recent fiasco.

In a note to clients, RBC analyst Paul Treiber downgraded shares of Blackberry, with the expectation that the company will continue to underperform despite the astronomical price rally that has dominated headlines as of recent. “Based on our view that a material patent sale or licensing settlement agreement has not occurred of the magnitude of the ~$7 billion value creation in the stock, we believe the fundamental justification for the rally in the stock to [more than] $18 per share would only stem from an improved outlook for either BlackBerry’s QNX/BTS automotive business or recurring IP licensing revenue,” he explained.

Treiber retained his 12-month price target of US$7.50 on Blackberry’s shares listed on the NYSE, suggesting a 58% decline in the share price is on the horizon. Neither of the nine major analysts that cover the company has issued “buy” ratings, meanwhile six have rated Blackberry as a “hold”, and three have given it a rating of “sell,” reveals Bloomberg.

Information for this briefing was found via Bloomberg and Reddit. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.