Written by Amy Legate-Wolfe at The Motley Fool Canada
Shares of BlackBerry (TSX:BB) soared last week, as rumours swirled that the company received a takeover offer from a private equity firm. While not official at the time of writing this article, it does bring up several questions. So, should BlackBerry stock investors buy, sell, or hold the stock?
Again, nothing is official as of writing, but sources stated that Veritas Capital offered to buy the Canadian software company. Coming on the market in 1985, BlackBerry stock came to the forefront of the smartphone industry. Yet last year, the company cut ties with the smartphone business altogether.
Since then, it’s been selling off its legacy patents, creating over $1 billion in patent sales. With so much cash available, BlackBerry stock looked to be set up for more investment into its autonomous car and cybersecurity software.
So, what is it exactly that Veritas Capital wants?
Why Veritas is interested
There really are very few details surrounding a potential offer, as there has been nothing official as of yet. Yet it’s likely that Veritas Capital is interested in the company’s technology used in vehicles. This refers to its QNX software and Cylance.
The acquisitions of Cylance and QNX software programs are both incredibly important to the future of BlackBerry stock. Cylance is a cybersecurity firm, which BlackBerry stock purchased in 2018 for US$1.4 billion. The technology from the company allows Blackberry stock to add artificial intelligence capabilities to its existing applications and software services.
QNX, meanwhile, focuses more on real-time embedded operating systems. Its multiple software systems are being put into modern vehicles, providing a tracking system and security for data used by vehicles now. But also for autonomous vehicles in the future.
Veritas Capital is an American private equity firm founded in 1992. Its sole purpose is acquiring companies with “critical” products and services. This has mainly allowed it to focus on the technology industry. However, that has expanded in recent years.
The company originally focused on government technology, such as defence and military exploits. However, it’s since expanded. There has been a shift towards integrated information technology in recent years, with several companies coming under its umbrella. The company has billions at its fingertips, so it’s likely that BlackBerry stock would be receiving a pretty decent offer.
The special purpose acquisition company may have a great offer, but it’s also getting BlackBerry stock at a great time. Shares have fallen dramatically over the years, now at about $7 per share as of writing. That’s quite the fall compared to its all-time highs of around $100 per share. While nothing is official, it’s certainly worth paying attention to what happens next.
Buy, sell, or hold?
Honestly, I’d say BlackBerry stock is a buy after this. The bottom line is, even if these rumours end up being just rumours, they bring attention to the stock once more. We’ll have to wait and see exactly what the companies say, but it could mean there is about to be some strong growth in the company’s future.
If Veritas Capital does put forward a takeover offer, watch for how much the company offers based on BlackBerry’s share price. This is likely where the stock will peak and could trigger a selloff.
Keep an eye on BlackBerry stock right now. And if it’s on your watchlist, it could be a great time to buy.
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