Shares in Canadian technology company BlackBerry are changing hands at their highest level in almost a decade on Monday, as investor enthusiasm for the once high-flying stock has mysteriously returned.
BlackBerry shares were trading at almost $25 a share when the Toronto Stock Exchange opened on Monday, up more than $7 or more than 40 per cent from Friday's level.
The stock has been quietly rallying for several days now, before taking off on Monday. When 2021 began, the company was worth just over $8 a share. It's now worth about three times that.
The company has had a number of small pieces of good news in recent weeks, but nothing that would explain Monday's rise in share price.
Last month, the company signed a deal with Amazon to work on a connected cloud software program for cars, and then in mid-January BlackBerry favourably settled a patent fight with Facebook, but Morningstar analyst William Kerwin says neither development is enough to explain Monday's surge.
"BlackBerry's stock movement doesn't appear to be rooted in any fundamental firm changes, in our view," he said in an email to CBC News.
Instead, the company has seemingly become one of many recent firms to benefit from a groundswell of retail investor enthusiasm on popular online message boards such as Reddit, regardless of whatever the Wall Street community thinks. Of the 11 analysts who cover the company, nine have a "hold" rating on the company's shares, and two have "sell" recommendations.
None suggest buying. But that's not stopping retail investors from doing exactly that.
"BB is moving on Reddit boards," said Ophir Gottlieb, CEO of trading firm Capital Market Labs. "Not much else to say."
More than 14 million of the company's shares changed hands in Toronto on Monday. That's more than three times the usual volume, and half the trading day is still to come.
Colin Cieszynski, chief market strategist with SIA Wealth Management in Toronto, says BlackBerry is just the latest in a series of companies that have seen unexpected rises in share prices in recent weeks.
The current stock market rally has driven up the valuation of huge companies, and now investors are moving down the food chain looking for bargains.
"Smaller stocks don't have as much liquidity or stock available to trade so a sudden stampede of cash chasing into a smaller cap stock can swamp supply and cause the kind of massive spikes on no news that have started to really pop up in the last week or so," he said in an email to CBC News.
"So to me, these moves are more about market sentiment, relative performance, and supply/demand issues rather than fundamental news."
Kerwin agrees that there are no fundamental changes to BlackBerry's business that properly explain the price surge.
"We think there's likely a shift in market sentiment about BlackBerry, perhaps with investors getting more bullish about [their] prospects after the fact. There's above average trading volume this morning, which might also point to [a] retail investor swell."
Gottlieb notes that BlackBerry isn't the only company being pushed up by the sudden trend. "This is not a single stock story, it is a behavioural story."
https://news.google.com/__i/rss/rd/articles/CBMiQWh0dHBzOi8vd3d3LmNiYy5jYS9uZXdzL2J1c2luZXNzL2JsYWNrYmVycnktc3RvY2stcHJpY2UtMS41ODg2MzI20gEgaHR0cHM6Ly93d3cuY2JjLmNhL2FtcC8xLjU4ODYzMjY?oc=5
2021-01-25 16:08:00Z
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