BlackBerry Limited (NYSE:BB; TSE:BB) has seen its U.S.-listed shares rally sharply, gaining 48.6% over five sessions through July 2, far outpacing the S&P 500's 1.7% rise. The surge has brought the stock well above the trigger price for a $200 million convertible-note deal, a key focus for investors.
On Thursday, U.S. shares closed at $11.51, down 10.2% from the day's high of $13.00, with 50.95 million shares traded. Markets were closed Friday for the Independence Day holiday. In Toronto, the S&P/TSX composite index gained 1.0% to 35,333.96, while BlackBerry's TSX-listed shares traded in a range of C$15.91 to C$16.34 on 956,880 shares.
The rally is tied to BlackBerry's 3% senior convertible unsecured notes, which are open for conversion from July 1 to Sept. 30. The notes have a conversion price of $3.88 per share, and the stock-price test for conversion is set at 130% of that price, or about $5.04. With the stock at $11.51, all $200 million in notes are well above the trigger. If fully converted, 51.5 million shares would be issued, representing potential dilution of about 8.8% of current shares outstanding (586.0 million as of June 22).
BlackBerry can choose to settle conversions with cash, stock, or a combination. At the current price, the fully converted shares would be worth about $593 million, compared to the company's $422.9 million in cash, cash equivalents, and investments as of May 31.
The company's operating performance has also improved. For fiscal Q1, BlackBerry reported revenue of $152.9 million, up 26% year-over-year. Adjusted EBITDA came in at $36.3 million, and operating cash flow was $4.6 million—its first positive Q1 operating cash flow in nine years, excluding patent proceeds. CEO John Giamatteo said the company outperformed on "revenue, profitability, and cash generation" and called the business "stronger than it has been in years."
QNX, BlackBerry's embedded software business, was a key driver. The unit posted a 26% revenue jump to $72.3 million. BlackBerry now expects fiscal 2027 QNX sales of $295 million to $312 million, up from its prior guidance of $290 million to $307 million, citing "really healthy demand" as customers adopt software-defined vehicles.
Secure Communications annual recurring revenue reached $220 million as of May 31, up from $218 million at Feb. 28. However, dollar-based net retention slipped to 92% from 94%, and days sales outstanding increased to 95 days from 88.
Analysts have responded with mixed views. RBC Capital Markets maintained a Sector Perform rating on BlackBerry but raised its price target to $9. CIBC bumped its target to $13 with an Outperformer rating, while Canaccord Genuity increased its target to $10.30, keeping a Hold rating. RBC analyst Paul Treiber noted that a sustained rerating would require "evidence of accelerating top-line growth."
With no earnings events on the near-term calendar, the focus remains on the convertible-note conversion window. BlackBerry's fiscal Q2 results are estimated around Sept. 24, though that date is subject to change.
