Blackberry office tower in Irvine, Cali.MIKE BLAKE/Reuters
Dear QuackerDick,
I don’t think we’ve met. I’m reaching out because I saw your post on the WallStreetBets forum, on website Reddit. You said you bought BlackBerry Ltd. (BB-N) on Tuesday, at US$18.42 a share. Which is three times the stock price at the beginning of the month. Your Reddit post said: “My entire savings account is riding on this.”
I’m not writing to say you’re an idiot. Please, have at it, if you want to put your entire nest egg into a stock that tripled in price over three weeks, despite BlackBerry putting out a news release on Monday saying there’s absolutely nothing happening to justify the rise. You’re in good company, alongside the 1.4 million other WallStreetBets followers who are currently pumping up the prices of last-generation tech darlings – GameStop and Nokia are also soaring.
You do know BlackBerry no longer makes smart phones, right? Just checking.
I’m writing to say that as a student of markets, I find you fascinating, QuackerDick. You and your Reddit pals are creating wealth, by dropping a lot of rocket ship emojis into your posts. And you seem to be having a blast. I am captivated by BlackBerry and GameStop-inspired memes that riff off some off some of my favourite Hollywood fare: Braveheart, Da Ali G Show, Peaky Blinders.
What I haven’t seen on Reddit is much, you know, analysis. When another WallStreetBets contributor, DairyonBigs, said on Tuesday: “We could have BlackBerry powered Autonomous EVs on our streets in the next 5 years,” that’s not analysis. It’s a guess, loosely linked to a self-driving vehicle software partnership the Waterloo-based company signed with China’s Baidu Inc. Back in 2018.
But who am I to argue with online investors who go ALL CAPS when they want to make a point? Such as another WallStreetBets contributor, called one-who-asks, who said yesterday: “BlackBerry YOLO LETS GO I want to be free of this mortgage.” You only live once. I guess that’s now an investment strategy.
It’s dangerous these days to be a naysayer. Melvin Capital, a hedge fund with a sterling track record, bet against GameStop and promptly took a 30-per-cent loss. Melvin needed a US$2.75-billion bailout this week from two other fund managers. Short-seller Andrew Left at Citron Research, never shy about expressing an opinion, has quit social media after being attacked for questioning the wisdom of putting capital into GameStop. Which is a chain of stores. In malls. That sell video games. During a pandemic.
But who wants to face the abuse heaped on the hedge funds or CNBC’s Jim Cramer, who explained the Reddit crowd is able to cause “crazy moves” in stocks that are heavily shorted – with funds such as Melvin Capital betting the price will drop. Then the Mad Money host called these stocks a “side show.” He’s among the commentators pointing out many of these small investors are using options-based strategies to increase their leverage in BlackBerry or GameStop, and in doing so, hiking purchases of the stocks.
Hey, you do understand that options have a limited lifespan, and can expire worthless, right? Or are you in the same camp as WallStreetBets contributor Radioo2118, who responded on Tuesday to Mr. Cramer by saying: “Your contempt for the retail investor (your audience) is palpable and if you don’t get it together, you’ll lose an entire new generation of investors.”
Look, I don’t want to lose an entire generation of investors like you. So I’ll only briefly mention the report RBC Capital Markets published on Tuesday, that explained nothing has changed in BlackBerry’s business lines. Analyst Paul Treiber said the recent rally pushed the stock’s valuation “to multi-year highs and above peers.” He said recent filings show four BlackBerry insiders sold a total of 170,000 shares since December, at an average of US$12 a share. The analyst kept his one-year target price at US$7.50, which was 58 per cent below where BlackBerry was trading at the time.
Look, I get it. We’re all stuck at home, in front of screens. Trading stocks and posting funny memes is more fun than working out, or taking a disciplined, long-term approach to investing. YOLO.
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