BlackBerry stock price nearly halved in the last month, dropping from as high as $20 to close to $11. The move lower followed a triangle that acted as a reversal pattern, and, on the retest of its lower edge, short-sellers entered the market aggressively.
The current bearish price action holds inside of a declining channel, and BlackBerry stock price diverges from the bullish price action seen in the main market indices. After all, this is a meme stock that does not trade according to its valuations. Instead, the price is influenced by concerted actions from the retail community that trade in unison.
The main US indices closed yesterday at record highs. Despite the bullishness in the stock market, BlackBerry stock price is affected mainly by the analysts’ ratings that point to further downside.
Out of eight analysts that are currently covering the BlackBerry stock price, none holds a buy rating. Six of them hold neutral ratings, while two analysts recently changed their rating from neutral to sell. The two are TD Securities and CIBC World Markets, and they downgraded the BlackBerry stock price to sell in the last week of June.
Earnings estimates point to EPS CAD0.22 in 2021 but a loss in 2022 and a return to profitability or break-even in 2023. Thus, the fundamental perspective also weighs on the BlackBerry stock price.
Technical traders have all the reasons to be bearish. However, this being a meme stock, one should not discount abrupt short-squeezes. Therefore, caution is needed when trading it on the short side, as money management is key.
Bears may want to stay on the short side while the price action remains in the bearish channel. Until the market breaks the lower highs series, the bearish price action continues. A move above the $14 level will invalidate the bearish setup, while the target may be set by using a risk-reward ratio of 1:2.
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