Much of last week’s ‘off-exchange’ trading volume of BB stock involved short sellers
In the first three months of 2023, quite a number of large institutions bought shares of BlackBerry (NYSE:BB) stock, according to recent SEC filings compiled by Fintel. BB stock posted a 20.8% rise in those three months; Since March 30, it’s added another 34.5% to that.
Further, the data shows that last week, short sellers accounted for a large percentage of Blackberry’s off-exchange trading volume.
Also last week, the company reported that it is “targeting… profitability,” excluding some items, in the fourth quarter of its fiscal 2024. BlackBerry’s FY24 will begin in March 2024.
BlackBerry currently focuses on providing cybersecurity solutions to businesses and governments, and on marketing its extremely secure operating system, QNX, to automakers and, increasingly, other businesses.
Additionally, in 2020, BB announced that it was partnering with Amazon (NASDAQ:AMZN) on IVY, an in-vehicle platform that will, according to the company, allow automakers to easily and securely sell apps to their customers.
Big Institutions Bought BB Stock
Who were those big buyers earlier this year? On May 18, JPMorgan reported that it had acquired nearly 410,000 shares of BB stock in Q1. Axa, the large European insurance company, reported on May 15 that it had acquired 10,748 shares of BlackBerry last quarter, increasing its ownership of the company’s stock by 2.87%.
Also in Q1, Deutsche Bank added 37,759 shares of BB stock, while D.E. Shaw acquired 975,159 shares of the name, the two institutions reported last week.
Finally, the State of Wisconsin Investment Board bought 33,025 shares in Q1, according to its May 15 filing.
Off-Exchange Short-Selling Volumes
On May 18, 60.47% of the “off-exchange” trading volume of BB stock involved short sellers, while the equivalent percentage came in at 67.8% on May 17, 53.62% on May 16, and 46.47% on May 15, according to FINRA data compiled and analyzed by Fintel.
The total off-exchange trading volume on May 18 was 2.46 million, while it was 3.36 million on May 17, 750,400 on May 16,753,200 on May 15.
Off-exchange platforms, or dark pools, are where orders are not publicly observable to other market participants and where orders are required to be matched within a consolidated bid-ask spread.
Shorting on both exchanges and dark pools is associated with informed trading, producing positive returns, according to one academic paper. In their analysis — “Shorting in Broad Daylight: Short Sales and Venue Choice” — authors Mehrdad Samadi of Southern Methodist University’s Cox School of Business, Adam Reed of UNC Kenan-Flagler Business School and Jonathan Sokobin of FINRA, noted that However, exchange short sales are significantly more informative than dark pool short sales.
Guidance and Targets
For its fiscal 2024, BlackBerry expects to generate $665 million-$700 million of revenue, up from $624 million in FY23. And in FY26, BB expects its sales to come in at $880 million-$960 million.
The company expects the revenue of its Internet of Things unit, which is currently dominated by QNX, to surge at a compound annual growth rate (CAGR) of 18%-22% between FY23 and FY26.
BlackBerry is targeting an annual increase in its total gross margins, excluding some items, of about two percentage points “to FY26.” And finally, it’s targeting positive cash flow and positive earnings per share, excluding some items, “beginning in FY25.”
Forward Valuation of BB Stock
Based on the midpoint of its FY26 revenue target, BB stock is changing hands at a forward price-sales ratio of 3.4.
Also noteworthy, however, is that the company had $426 million of cash, cash equivalents, and short-term investments as of the end of last quarter, while it announced on May 11 that it had received $170 million of cash in exchange for “ substantially all of its non-core patents and patent applications.”
Further, as of the end of last quarter, the current portion of its long-term debt was $367 million.
The post Let’s Look at Which Large Institutions Bought BlackBerry Stock in Q1 appeared first on Fintel.
