On December 10, 2013, BlackBerry (NASDAQ:BBRY) stock declined to establish a ten-year price low at $5.44 per share. As recently as 2008, BlackBerry controlled roughly half of the smartphone market and Research in Motion share prices then approached $150.00. Ironically, it was BlackBerry founder Mike Lazaridis who declared “amateur hour was over” upon the release of a Playbook tablet he dreamed up to compete against the Apple (NASDAQ:AAPL) iPad. BlackBerry was to follow up the Playbook debacle with what Business Insider thoroughly ripped as a “disaster” in BlackBerry 10.
Still, BlackBerry stock has nearly doubled over the past quarter to close out the March 14 trading session at $9.31. Prospective investors should be advised that BlackBerry share prices might be subject to extreme volatility going forward. For now, BlackBerry managers are literally floating the note and buying time until engineers can design product to compete against the likes of Apple iOS and Google (NASDAQ:GOOG) Android. Going forward, BlackBerry shareholders may be forced to wave the white flag of surrender at Waterloo if this company remains shut out of American turf.
On December 20, 2013, BlackBerry released Q3 2014 financial statistics. For BlackBerry, its latest third quarterly period ended November 30, 2013. Blackberry identified a new organizational structure above $3.2 billion in cash on the books as highlights. Still, BlackBerry took $4.4 billion in net losses upon a mere $1.2 billion in revenue. BlackBerry has already racked up $5.5 billion in losses through the first nine months of this fiscal year 2014 year. Wall Street investors, however, have applied a $4.9 billion market capitalization price tag to BlackBerry. In effect, BlackBerry shares are trading off hope. In theory, all assets that cannot be leveraged for profit will depreciate towards zero.
Traders have targeted BlackBerry stock as an aggressive short position for two years running. A Trader would open a short position after borrowing BlackBerry stock from other investors and immediately selling those shares for cash. At a later date, this trader would re-enter the market and “buy to cover” BlackBerry to replace the original stock loan. Short sellers therefore profit amid steep share price declines. A short position, of course,exposes traders to extreme financial risks because share prices theoretically range between zero and infinity.
A “short squeeze” occurs when traders frantically buy to cover to close out short positions and avoid severe losses. BlackBerry is especially prone to the short squeeze phenomenon, due to its relatively small float. Yahoo Finance recently reported that traders had sold short 94.5 million out of 518.4 million shares of BlackBerry stock outstanding, as of February 14, 2014.
BlackBerry U.S. Sales
BlackBerryhas historically classifiedits sales according to Latin American, Asian, and North American geographic regions. BlackBerry has also combined Europe, Middle East, and Africa together beneath one geographic entity. North America accounted for $340 million out of $1.2 billion in Q3 2014 total net sales at BlackBerry. North America, which would includeBlackBerry’s Canadian home base, has accounted for roughly 25 percent of sales over the past two years. Success within the U.S. is critical for BlackBerry to expand sales growth, gross margins, and ultimately, net income. Supplementary data to BlackBerry financial documents will confirm that this company is all but irrelevant within the United States.
On March 7, 2014, research firm comScore released a report that summarized January 2014 U.S. smartphone subscriber market share. Be advised that this report actually presented averages for information spanning between November 2013 and January 2014. A quick review of the comScore data would prove that the American smartphone market largely branches off into three wings in Samsung (OTC:SSNLF), Apple, and Google wings. According to comScore, Google Android and Apple iOS systems operated 51.7 percent and 41.6 percent of U.S. smartphones through the holiday season. As original equipment manufacturers, Apple and Samsung combined to control 68.3 percent of the U.S. smartphone market. Meanwhile, Microsoft (NASDAQ:MSFT) Windows, BlackBerry, and the practically defunct Nokia (NYSE:NOK) Symbian operating systems have been left to duke things out over a remaining 6.5 percent share of the smartphone market. Last quarter, BlackBerry actually lost 0.5 percent in market share upon a sequential basis. Microsoft’s looming close of its $2.7 billion Nokia buyout may represent the ultimate nail in the coffin for BlackBerry’s fortunes within the United States.
As such, BlackBerry investors may consider selling out and cashing in winning chips now, in order to avoid a severe price correction in shares over the next year. BlackBerry’s immediately plans to sell off real estate, fire workers, and burden shareholders with $1.25 billion in convertible bonds shall not be mistaken for real, long-term growth.