I see three major reasons why RIM is poised to grow in 2013.
First, RIM's stock has been destroyed over the last four years from its peak of $144 in 2008. Since then it has lost roughly 95.5% of its value hitting a low of about $6.50. Such a huge decline in share price is an immediate sign that this stock warrants a second look in order to see if the sell-off was justified or purely emotional and to tell if there might be an opportunity for the stock to ascend back up to prior levels.
In the case of RIM, I think a sell-off was definitely warranted given how far Blackberry lagged behind competitors like Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG). Whether a sell-off of more than 90% was warranted is not something I want to get into nor does it matter. The important point is that with RIM about ready to launch the Blackberry 10 and a stock price heavily beaten down, there is huge potential for this stock.
Second, back in 2010, RIM had 40% market share, but with the rise of Apple and Google coupled with RIM’s lack of innovation, it now controls a meager 5.3% of the market. Apple and Google have gone from smartphone obscurity, to the two dominant players in the market controlling a combined 86% of the total smartphone market.
With a market share so battered and a product so unappealing, RIM now has one huge advantage coming back into the smartphone market, lower expectations. Apple, due to its enormous success, has a trove of investors who expect it to grow by astronomical amounts every quarter. When that doesn’t happen they get scared and sell, as we have witnessed over the past two months or so.
RIM is starting at the bottom. If it gains a few percentage points of market share, that becomes huge positive news for investors. Sales growth of 40% or 20% or even 10% is great news for RIM. News like that will make the stock price rise.
Third, the market wants the RIM stock price to rise. Investors are just looking for a reason to buy. Over the past month or so the stock is up about 35% from its all-time low on speculation about the upcoming release of Blackberry 10. It now trades at around $8.80
In addition, when the announcement was made that the Blackberry 10 was being tested by phone carriers, the stock rose 10%. What I see are investors who want to believe in RIM and are just looking for a reason to do so.
To me, investors are waiting for every dip to buy (I've been). Look at today's trading and last while.
There will be back and fore, nothing goes straight up.I myself don't bother with the small jigjag movement and focus on the big picture. I have been nibbling on the dips. Thanks to the shorts for the opportunities.