Executives in BlackBerry, one of many struggling companies whose stock prices are being juiced in a Reddit-instigated speculative frenzy, jumped on the chance to dump shares at a wildly inflated rate.
BlackBerry, once one of the leading smartphone manufacturers in the world, has been stuck on the fringes for years and until recently commanded a stock price in the neighbourhood of $US5 ($7). Waves of speculation in a few underperforming stocks this week began when Redditors on the bro-y r/WallStreetBets board began pumping up the price of ailing retailer GameStop and coronavirus-tormented theatre chain AMC in part of a bid to screw over short sellers like hedge fund Melvin Capital. But it quickly spiralled out of control, as everyone from major Wall Street sharks to amateurs on stock-trading app Robinhood flooded the targeted stocks. BlackBerry’s bubble spiked as high as $US28.77 ($37) on Wednesday before promptly popping; it’s not entirely deflated yet, and still stands at $US14.10 ($18) on Friday afternoon.
Per Reuters, U.S. Securities and Exchange Commission filings show at least three executives at Blackberry, including its chief financial officer, seem to have seen this as a rare opportunity to dump some BlackBerry stock at baffling highs.
CFO Steve Rai liquidated his entire position of 33,000 shares in the company for $US428,731 ($558,765) on Jan. 21, about double what it was worth at the beginning of the year. He might be kicking himself though, because days later the stock spiked even further. Mark Wilson, BlackBerry’s chief marketing officer, cashed out 78,500 shares for $US991,445 ($1,292,150), or about $US12.63 ($16) a share. Division leader Billy Ho sold some $US259,000 ($337,555) in shares.
BlackBerry stock was spiking mainly for one reason completely disconnected to any reality at the company: mass speculation in cheap stocks kicked off by a Reddit campaign. The company even told reporters it had no obvious explanation for its rocketing share price. Competitor Nokia, another cellular device manufacturer, also earned the dubious honour being deemed a “meme stock.”
Financial analysis firm Trefis wrote on NASDAQ that whileBlackberry recently settled a lawsuit alleging Facebook subsidiaries WhatsApp and Instagram had infringed on its patents and sealed a patent deal with Chinese tech giant Huawei, the company had posted losses for seven quarters straight. Trefis’s own machine learning model predicted the stock had a 90% change of decline in the next month. The company is undervalued relative to other tech companies, but also hasn’t shown any signs of sustained growth, Trefis added. So BlackBerry brass made out quite well, considering the stock could have plunged at any time instead of continuing to inflate.
Reuters reported that all three execs had been selling throughout the last year, but this was their largest haul.
“The BlackBerry executives traded during an open trading window, as permitted under company policy, and all of our executives continue to have strong equity-based incentives through our long-term equity program,” the company told the news agency in a statement.