Why BlackBerry Stock Soured Today
Key Points
BlackBerry stock fell 13.7% even though the company beat Wall Street’s earnings expectations.
Investors were hoping for more upside at the top end of guidance, not just a higher floor.
Valuation and expectations going into the report left minimal room for anything less than a flat-out bullish outlook.
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Shares of BlackBerry (NYSE: BB) went sour on Friday, following a solid earnings report with a side of constructive but unexciting guidance. The stock closed 13.7% lower, revisiting price levels not seen since mid-September.
When "solid" isn't good enough
The communications security and embedded systems specialist posted robust results in the third quarter of fiscal year 2026. Revenue fell 1.8% year-over-year to $141.8 million while adjusted earnings landed at $0.05 per diluted share, up from a breakeven result in the year-ago period. The analyst consensus had pointed to earnings near $0.04 per share on sales in the neighborhood of $135.6 million.
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BlackBerry's management also updated their full-year guidance, tightening their target ranges around the upper half of last quarter's guidance report. In other words, BlackBerry raised the lower end of its full-year target ranges while leaving most of the top-end levels untouched.
That's a mildly bullish review of the ongoing fourth quarter, but not exactly a home run. Shares were trading at a lofty 48 times trailing earnings on Thursday evening. Barely edging out Wall Street's expectations while top-line sales are down just wasn't enough, and the modest guidance boost didn't help.
Image source: Getty Images.
Guidance, momentum, and expectations
It's not always easy to keep investors happy, despite above-guidance Q3 results and boosted targets across the lower end of most full-year guidance ranges.
Today's sell-off looks like a classic case of investors "selling the news" after a recent mini run-up, especially with BlackBerry still posting year-over-year revenue declines and bullish long-term expectations already baked in. The market is fixating on signs of slower momentum (particularly in key operating metrics like recurring revenues) rather than last quarter's backward-looking beat.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry. The Motley Fool has a disclosure policy.
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