BlackBerry (NYSE:BB) stock often rises meteorically and then crashes quickly. That’s what has happened recently to the shares of the Canadian company that was once known for its phones and is now focused on security software.
BB stock doubled between June 1 and June 3, spiking above $20 at 9:30 am on the latter day. Those same shares dropped to $16.40 ten minutes later, fought back for about an hour longer, and then dropped at the end of the day and on June 4 before making a comeback on June 7. If that sounds chaotic and fraught with risk, that’s because it was.
The short interest of BlackBerry remains around 9%. That’s not insignificant, so retail investors may have been hoping to trigger a short squeeze in the name.
This was not the first time that BB stock spiked in 2021. Back in late January, the shares rallied similarly.
The recent fluctuations by other meme stocks can provide an indication of BlackBerry’s future trajectory.
Other Meme Stocks
Koss (NASDAQ:KOSS) and AMC Entertainment Holdings (NYSE:AMC) are among the more prominent meme stocks. Investors have been taking profits from both over the last few days. Those names probably exert some downward pressure on BB stock. And BlackBerry’s stock indicates that the shares are cooling off.
BB stock traded relatively flat between February and June.
Those facts indicate that BB stock probably won’t rally again anytime soon.
Short Interest
Investors are constantly searching for the next GameStop, meaning they’re looking for highly shorted equities that will soon be squeezed, resulting in huge profits for those who own the shares.
From that perspective, BlackBerry, with its 9% short interest, isn’t very attractive. GameStop is more enticing, given its current short interest of 21%. The truth is that investors are quickly shifting their capital to stocks with high levels of short interest.
But there are names with higher short interests tyhan BB stock on this list. I counted 35 stocks with higher short interest than BlackBerry, including names like Workhorse (NASDAQ:WKHS), Beyond Meat (NASDAQ:BYND), QuantumScape (NYSE:QS), and Virgin Galactic (NYSE:SPCE).
The point is simple: retail traders are looking for extremely high levels of short interest. Since BlackBerry’s short interest isn’t that elevated, it isn’t going to be popular with many investors soon.
As many have noted, there’s no great fundamental reasons to be bullish on BB stock.
The BlackBerry of the Future
It’s safe to assume that the word “BlackBerry” conjures up images of cell phones with keyboards from nearly a decade ago. But the Blackberry of today is more about automotive software and cybersecurity than phones. The company has pivoted toward vehicle hardware and automobile operating systems.
In fact, BlackBerry has the leading automotive embedded operating system, as 9 out of the top 10 vehicle makers use BlackBerry’s technology. That sounds good, but the further one digs into the company’s recent presentation, the greater the sense one gets that the firm is grasping at trendy niches rather than leading.
So there’s not much for traders to do with BB stock now. And over the longer term, there’s little justification for further gains by the shares.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.