What is Wrong with BlackBerry?

This question has been plaguing me for weeks.  What is going on here?  Even the noted bear on the stock from Jefferies, analyst Peter Misek, who questioned BlackBerry’s survivability at one point last year and now rates the company a buy with a $22 price target, says that sales checks on the Q10 “indicate broad sellouts” and he continues “Based on our store checks, the BlackBerry Q10 has been selling extremely well and has been sold out or seeing limited availability in Toronto and across the U.K.”

This sounds positive doesn’t it?

Well let’s look at the model price chart of BlackBerry and it tells a slightly different story.

BlackBerry with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

BlackBerry with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of BBRY subsequent to this post will be maintained on Facebook, here.

As you can see BBRY has been trying to have a positive transit of EBV-1 or $15.76US on three separate occasions since mid January of this year.  It even tried last week but to no avail.  All this price action is occurring under our definition of the book value of BlackBerry’s balance sheet.  See our definition of book value is our green line or Economic Book Value (EBV), is different from accounting book value.  Even using the conventional accounting book value that we calculate to be $18.14 is above BBRY’s trading action.

So here is my issue with the trading action of this company.  Certainly to my mind BlackBerry should be trading at least at book value, whether our definition (EBV) or the accounting profession’s, and it can’t even transit through EBV-1.  Since the launch of Z10, and now the Q10, no one questions BlackBerry’s survivability does it?  Not that I have seen in the financial press.

Here is a company that will make money this year, solvent and with some analysts predicting big earnings in the coming years and it’s trading like a “dog”!

Something is certainly going on here and I wish I knew why?  Maybe BBRY will have a positive transit of EBV-1 in the near future and all my suspicions and questions are moot.  I would feel better about this Canadian company if there was a positive transit of EBV-1 and trade at least at EBV or our green line if things are so groovy as Peter Misek suggests.

As always time will tell!

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