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Why BlackBerry Stock Plunged Today

By Joe Tenebruso - Mar 31, 2021 at 7:21PM

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A steep decline in sales prompted many investors to sell their shares.

What happened

BlackBerry's (BB 1.02%) stock price sank 9.7% Wednesday, following the release of the software company's fourth-quarter earnings results. 

So what 

BlackBerry's revenue fell 25% year over year to $210 million. That was well below the $245 million Wall Street had expected. 

The software maker said talks to sell some of its mobile devices, messaging, and wireless networking patents to a "North American entity" contributed to the revenue shortfall. The negotiations led BlackBerry to delay sales activities that could have resulted in higher licensing revenue during the quarter.

A person is pointing to a digital stock chart that rises sharply and then falls.

BlackBerry's shares fell sharply Wednesday. Image source: Getty Images.

A worldwide semiconductor shortage that has forced car manufacturers to curtail production also weighed on sales of BlackBerry's QNX operating system for the automotive market. Still, CEO John Chen highlighted some of the company's recent success in this key segment.

"This has been an exceptional year to navigate, however we are pleased with QNX's continued recovery, despite new challenges from the global chip shortage," Chen said in a press release. "QNX now has design wins with 23 of the world's top 25 electric vehicle OEMs [original equipment manufacturers] and remains on course to return to a normal revenue run rate by mid-fiscal 2022."

Now what

BlackBerry's stock got caught up in the short squeeze mania that helped to drive up the prices of stocks like GameStop and AMC Entertainment in recent months. But while day traders can temporarily impact market prices, the long-term value of a business is ultimately determined by its sales and profits. If BlackBerry's share price is to head higher over time, investors will need to see significant improvement in these areas.

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