2 WallStreetBets Stocks Analysts Believe are Overvalued

NASDAQ: BB | BlackBerry Limited News, Ratings, and Charts

BB – In the wake of GameStop’s (GME) epic stock run in January, Reddit’s WallStreetBets community targeted many other stocks seeking to gain from betting against hedge funds’ short positions, with some success. While many of those stocks lost significant value after hitting their highs, Wall Street analysts believe BlackBerry (BB) and Academy Sports & Outdoors (ASO) are still overvalued. Let’s discuss.

Reddit’s WallStreetBets community, which is known for betting on heavily shorted stocks and squeezing out short-selling hedge funds, has made many other fundamentally weak stocks perform in their favor after their success with GameStop Corporation’s (GME) stock.

However, many of these stocks witnessed noteworthy corrections on profit taking and investors’ concerns over their poor growth prospects.

Despite losing some value since hitting their highs, two of the WallStreetBets stocks–BlackBerry Limited (BB) and Academy Sports & Outdoors Inc. (ASO)–still look overvalued to Wall Street analysts. So, we think it could be wise to avoid these stocks now.

BlackBerry Limited (BB)

Founded in 1984, BB leverages artificial intelligence (AI) and machine learning to deliver solutions to enterprises and governments in the areas of cybersecurity, safety and data privacy, and offers endpoint security management, encryption, and embedded systems. The company operates through three segments—BlackBerry Spark, BlackBerry IoT Solutions, and BlackBerry IP Licensing.

Last week, Volvo Group (VLVLY), a leading manufacturer of heavy-duty vehicles and construction equipment, selected BlackBerry QNX as the foundational software for its electronic control units in more than 300,000 heavy vehicles. In March, BlackBerry QNX was also selected by Scania AB, a Swedish transport solutions provider, to provide a safety certified operating system (OS) and hypervisor for the high-performance computing platforms in its next-generation heavy goods vehicles. And on March 15, a new critical event management (CEM) solution called BlackBerry Alert that will help commercial organizations prepare for, respond to and recover from major incidents was introduced. Given BB’s weak financials, its  non-GAAP revenue has declined 26.1% year-over-year to $215 million for its  fiscal year 2021 fourth quarter, ended February 28, 2021. The company’s non-GAAP gross profit has declined 29.1% year-over-year to $158 million. Its non-GAAP income came in at $16 million for the quarter, down 68.6% from the prior-year period. And, its non-GAAP EPS was $0.03, which represented a 66.7% year-over-year decline.

Analysts expect the company’s EPS to be negative for the current quarter, ending May 31, 2021, which represents a decline of 145.5% year-over-year. Also, the revenue estimate of $171.25 million for the current quarter represents a 20% year-over-year decline.

BB has lost 12.6% over the past month. It ended Friday’s trading session at $9.13, which is 68.3% below its 52-week high. In terms of forward price/sales, BB is currently trading at 6.47x, which is 58.6% higher than the industry average 4.08x. And in terms of its forward EV/EBITDA, the stock is currently trading at 114.57x, 557.8% higher than the industry average 17.42x.

Wall Street analysts expect the stock to hit $8.66 in the near term, which indicates a potential downside of 5.1%.

Academy Sports & Outdoors Inc. (ASO)

Based in Katy, Texas, ASO operates as a sporting goods and outdoor recreational products retailer in the United States. It offers broad assortment appeals to all ages, incomes and aspirations, including beginning and advanced athletes. The company sells its products primarily under the Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous, and Outdoor Gourmet brand names. ASO also sells merchandise to customers via academy.com website.

In January, ASO priced a follow-on offering of 12 million shares of ASO common stock at  $21.50 per share.

For the fiscal 2020 fourth quarter ended January 30, 2021, ASO’s cash and cash equivalents fell by 56.6% sequentially to $377.60 million. The net cash provided by operating activities was  $154.38 million for the quarter, which represents an 8.6% year-over-year decline. Its total assets were $4.38 billion as of January 30, 2021, which represented a decline by 12% from the third quarter of 2020.

The consensus revenue estimate of $796.45 million for the fiscal period ending February 2022 represents a 10.8% year-over-year decline.

ASO closed Friday’s trading session at $30.84, which is 8.6% below its 52-week high of $33.74. Wall Street analysts expect the stock to hit $27.00 in the near term, which indicates a potential downside of 12.5%.


BB shares were trading at $9.04 per share on Monday afternoon, down $0.09 (-0.99%). Year-to-date, BB has gained 36.35%, versus a 10.26% rise in the benchmark S&P 500 index during the same period.


About the Author: Sweta Vijayan


Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...


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