The company's fiscal first-quarter results came in ahead of expectations and shares were briefly 1% higher this morning as result. But something went wrong, and shares are now down 9% to $7.54 in afternoon trading.
The decline has shares flirting with a major potential breakdown with the stock well below the $8 level. At face value, the report isn't enough to save the stock price.
Even though non-GAAP earnings of 1 cent per share came in one penny ahead of expectations, the company's GAAP loss of 9 cents per share missed expectations by 3 cents. On the plus side, revenue of $267 million eked past estimates by just over $2 million and grew 23% year-over-year.
Management's outlook calls for non-GAAP profitability this fiscal year, with revenue expectations of 23% to 27% growth. Consensus estimates currently call for 24.7% growth.
Despite all this, how do we trade the stock now?
Trading BlackBerry Stock
Shares have never really recovered from Apple's (AAPL) - Get Report dominance in the smartphone market, nor could it fend off Alphabet's (GOOGL) - Get Report (GOOG) - Get Report Android operating system. It's left BlackBerry floundering about for years, as shown above on the weekly chart.
However, the recent weakness is not all that surprising. Better results perhaps could have sprung BlackBerry free and repaired some of the technical damage, but last week's action was telling.
Shares rallied to $9.09 where they ran into the 50-week and 200-week moving averages. To little surprise, this confluence teamed up as resistance, swatting BB stock lower and forcing it to close the week near $8.50, down almost 6.5% from its intra-week highs.
That wasn't good, but losing $8 was far worse. $8 to $8.50 was prior range resistance a few years ago, while $6.50 acted as range support. The latter of these two levels played a role in December, when BlackBerry stock bottomed out near $6.57.
With BlackBerry losing this month's low, shares are showing signs of falling back into its prior range.
Unless BlackBerry can reclaim this month's low near $7.70 and then $8, odds are starting to favor a potential test of the December low. At this point, I would not be a buyer of BB stock unless it can firm up and show that buyers are back in control. Otherwise, consider nibbling near $6.50 to $6.70.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.