BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares are up almost 9% at $9.86 in afternoon trading on the Toronto Stock Exchange. Analysts say today’s big move up is at least in part due to short covering as sellers of the stock are closing positions to lock in gains or avoid further losses. Including today’s action, the share price of the Canadian smartphone manufacturer and software concern has increased by more than 30% over the last three weeks.
Positive investor sentiment providing a boost
Atlantic Equities analyst James Cordwell says much of the recent positive price action is related to positive investor sentiment. “I think the majority of people trading the stock on a daily basis are probably not there on a fundamentals view, they are more likely looking at what the news flow is going to be on a one to two-month basis. And I’d agree that the news is probably going to be more positive than negative in the near term.”
Heavily shorted stock
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has been one of the most heavily shorted stocks on the NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) over the last few quarters. Traders who “short” stocks borrow shares and then sell them anticipating that the price will fall, and they can buy back the shares at a lower price, return them and make a profit on the difference.
Short sales data from the financial information services firm Markit indicates that the percentage of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares loaned out for shorting has decreased by almost 35% over the last six months.
BlackBerry’s future looking brighter
Things were looking bleak for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) just a few quarters ago, with a few analysts publicly questioning the viability of the company and the stock trading below $5 for some time in early 2013. It seems the worm has turned for BlackBerry, however, and new CEO John Chen may have righted the ship.
One piece of recent good news was inking a handset production deal with FIH Mobile last month. The deal significantly reduces BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s risks in having to write down unsold smartphones. The Pentagon also announced last week that BlackBerry phones represented nearly 98% of the devices supported in a program to bring greater mobile access to Department of Defense personnel. CEO Chen has also suggested in interviews that the company will refocus its efforts on enterprise software and services.