BlackBerry Ltd. shares reached their highest price in more than two years after short-seller Citron Research said the company was a likely target for a buyout at a high premium.
The stock gained 7.76 per cent to $11.39 (U.S.) Thursday in New York, after earlier hitting $11.74, the highest intraday price since January 2015. Citron recommends investors buy shares, arguing the company will reach $20 in 24 months. BlackBerry's security software for the automotive industry, QNX, could be a "game changer" in autonomous driving, Citron said in a report, which compared the company to chipmaker Nvidia Corp. and said it could be a buyout target.
Nvidia's recent stock surge mostly came from investors "giving them credit for new businesses they're entering," Citron Research's Andrew Left said in a Bloomberg Television interview. "Similarly with BlackBerry, if they start focusing on the QNX business, or if they start focusing on the Internet of Things business, they can get higher multiples and the stock will move faster than the actual numbers would move."
The QNX autonomous driving software currently has an installed base of 60 million, four times the number Mobileye had when Intel Corp. made an offer that led to a $15 billion acquisition, Left said. That makes BlackBerry an attractive target for any big technology company that doesn't have an autonomous driving play and feels "remorse" for missing the trend, including Microsoft Corp., he said.
After three years of shedding costs, moving away from handsets and buying companies to boost growth, BlackBerry Chief Executive Officer John Chen has steered the company back on track. BlackBerry is now focused on selling its suite of security-focused software, having surpassed its target for software sales in fiscal 2017.
Whether BlackBerry can succeed in autonomous driving and the Internet of Things will depend on how Chen manages the company's growth and how fast self-driving systems are adopted, Left said. If Wall Street starts to perceive the QNX product as a market leader, then the stock growth will follow, he said.