How Will BlackBerry Shares React to Q1 Earnings?

After U.S. markets close Thursday, BlackBerry Ltd. (NYSE: BB) will report first-quarter 2022 results. The cellphone-maker-turned software provider is expected to post a loss per share of $0.05 on revenue on sales of $171 million. In the same period last year, the company posted sales of $214 million with a profit of $0.02 per share.

Since the beginning of the year, the share price is up about 95% but in late January shares were up 278%. That’s when meme stocks took a big chunk out of short sellers’ profits by bidding up BlackBerry and other heavily shorted stocks and forcing the shorts to cover their bets. These short squeezes didn’t last long because they had little to do with fundamentals and everything to do with animal spirits.

Assuming BlackBerry reports numbers relatively close to the estimates, the stock could move a fair amount in either direction. A lot will depend on what CEO John Chen has to say about the planned sale of the company’s patent portfolio. At BlackBerry’s annual shareholders’ meeting Wednesday, Chen said discussions were ongoing.

BlackBerry could realize $1 billion in cash from the patent sale which could result in a sequential revenue decline of 17% when it happens according to RBC analyst Paul Treiber. BlackBerry is likely to use the cash to further its software development.

Looking at trading in BlackBerry options, implied volatility in the stock is greater than 100%, suggesting that a large swing in either direction is possible once the company reports results. Volume on June 25 call options early Thursday were about double the volume on put options.

Discussion mentions of BlackBerry on r/wallstreetbets has been non-existent Thursday morning, indicating, perhaps, that meme stock investors are looking elsewhere for profits.

Just before noon, BlackBerry shares traded down about 1.8% at $12.90 in a 52-week range of $4.37 to $28.77. Average daily trading volume is 41.3 million shares with only 8.7 million shares changing hands so far Thursday.