Don't look now, but shares of BlackBerry-maker Research in Motion (RIMM) are up over 50% since the start of November.
Several analyst upgrades for RIM have created a splash of confidence that's having a positive ripple effect for the stock price. But the sustainability of the recent rise is contingent upon the success of the BlackBerry 10, expected to officially launch on Jan. 30 and begin shipping in February.
"They have been clowns for the last five years. Let's state that upfront," says Eric Jackson, founder of IronFire Capital. "I just don't think at this point they're going to screw up from here."
Just today, the company launched its BlackBerry 10 Ready Program aimed at helping businesses prepare for the new platform. The BB10 will run on a new operating system and offer keyboard and touch versions of the device.
Until recently, the only position Jackson ever had in RIM was shorting the stock from $70 to $20 a share. He detailed his change of heart in a blog post: "Why I —A Former Short—Just Bought Blackberry's Stock And Think It Can Go to $40".
"The reason why I own it is I'm anticipating no new people migrate to the BlackBerry, but what they do have is 80 million net subscribers," he explains in the attached video. "A lot of lawyers, a lot of investment bankers, finance people, still carry these things around. I'm constantly amazed when I look around and I see people walking around in the street with them."
According to IDC, the smartphone market is expected to grow 45% in 2012 from a year ago, with Google's (GOOG) Android holding a strong lead in market share. Here are IDC's top smartphone operating systems for the year:
Apple iOS: 18.8%
Windows Phone: 2.6%
Jackson admits he's an iPhone user with no intention to switch to BlackBerry, but he's counting on some of the 80 million user base to stick with it and upgrade.
"The fact is, if they sell 18 million of these things next year, that's break-even. Anything above that is gravy," he states. "Nobody is giving them any kind of credit for this business and the valuation today, even with the recent run-up."
Since touching an all-time low of $6.22 a share on Sept. 24, RIM shares have recovered 85%. It's worth noting that roughly 20% of the outstanding shares are shorted.
Regardless, Jackson is bullish on BlackBerry users and believes the loyalty could become a huge windfall for the company and the stock price.
His game plan is to hold his position until BB10 starts shipping in February, expecting more analyst upgrades along the way and a further run-up in stock price.
"Once it ships then that'll be the time to decide to stay with it or cut out of it," he says. "But right now I am optimistic. I think a lot of people after two years, will go and buy this thing. It actually looks pretty decent, some people say functionality-wise it works better than an Android."
Like any good investor, Jackson does have a list of questions and concerns about the stock, and he recently fired them off to a long-time Canada-based RIM analyst. "If this thing works in the next year, I think the stock could go to $40 and really shock a lot of people," Jackson concludes.