BlackBerry bulls have had a awful time this year. It is a warning on trying to find value in technology stock. Despite that the fact that BlackBerry is trading at a discounting its potential takeover, I think shareholders would be wise to sell now.
This will be a short post. Like I said, BlackBerry shareholders have not had a good time. There were buyout rumors when it was at $13, and even when they were still Research in Motion. And while this is no rumor, I don’t think it is worth the 3% upside for investors to hold onto this stock. Lets get one thing straight, you are not going to get a higher price. There is a very real chance that you will get no takeover, and BlackBerry will have to pay Fairfax the 30 cents/ share termination fee. You know what happens if the deal falls through? Game over. Seeking Alpha Contributor Vince Martin does an excellent job of de-validating the “BlackBerry has cash so this acquisition price is to low argument,” saying:
The buyout is too cheap; BlackBerry has $2.6 billion in cash.
And a quarter ago, it had $3.1 billion, but it burned through nearly $1 per share over just the past three months. BlackBerry is hemorrhaging money right now.
He is right, don’t make this argument. Be careful with BlackBerry, you could still get burned.
