The catalyst? Earnings, and the bearish reaction is taking BlackBerry stock below key support that's been in place for years now. That's not a good sign, even though some investors continue to believe in its long-term future.
BlackBerry reported fiscal second-quarter earnings of $0.00 per share, which was enough to beat expectations by a penny per share. Revenue of $261 million grew 22% year-over-year but missed analysts' expectations by almost $7 million.
The company made its interim CFO its permanent CFO and created a new chief revenue officer role to focus on growth. Management expects non-GAAP revenue growth of 23% to 25% for the year.
The headline numbers aren't bad, but Wall Street isn't giving BlackBerry the benefit of the doubt. Now it's time for investors to put up or shut up with this one, as it teeters on the brink.
Trading BlackBerry Stock
There have been several overshoots below $6.50 -- "wicks" as they're called on a candlestick chart, such as the one above -- but for the most part, this level has been a very solid support level for BB stock over the years. That's evidenced by the strong bounces and relatively rare weekly closes below this mark.
On the chart above, BlackBerry has only closed below this mark twice in the past five years, with both times coming in 2015.
With Tuesday's decline, BlackBerry stock is blowing right through its multiple summertime lows near $6.65 and also through its December 2018 low at $6.57. Further, there's not just one, but multiple downtrends in play (blue lines), squeezing BB stock lower.
At this point, vital support is broken. Now what?
BB stock is below all of its lows from the last five years, with the exception of one: $5.96. In my view, this could act as a magnet for BlackBerry stock should the selling pressure continue.
What investors really need to see is a rebound up to $6.50. If it comes, we need to see if BlackBerry stock reclaims this mark and regains its footing, or if this mark acts as resistance and sets a new tone.
Until then, BlackBerry may very well be a "no touch" for many traders.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.