Tesla and Blackberry
Over this past weekend, I found myself reflecting on two of the underperforming stocks in my investment portfolio. Fortunately, these are my only two poorly performing stocks in my odd 15 stock portfolio, as all my other investments are either holding steady after runs last year or continuing their run. Interestingly, these two stocks share some similarities in their investment thesis, even though they are fundamentally different companies. They just happen to be operating in the same industry in very different ways.
One of these companies is a darling of the stock market and electric vehicle (EV) enthusiasts: Tesla. The other is a much less popular company that many people love to hate: BlackBerry. You might be wondering how I dare to compare these two companies. However, if you look beyond the physical vehicles themselves, you'll see that they actually do very similar things. Both companies offer an operating system for cars that supports over-the-air (OTA) updates and analytics. Additionally, both companies are currently being affected by the current macroeconomic conditions and delays in EV adoption.
As was evident from Tesla's recent earnings call, one of the company's main challenges is its inability to gain traction in other vehicles to launch its services. On the other hand, BlackBerry's IoT division is already profitable and is currently running in 235 million cars. However, this division is not generating as much revenue as it should, earning less than a dollar per year per car. The reason for this is that the value-adding layers above have been taken over by BlackBerry's own customers. Given the company's relatively small size at present, I believe that BlackBerry has to cater to each and every penny and every customer.
Since every analyst out there seems to be offering suggestions to Tesla, I thought I would share my thoughts as well. I have just one suggestion for Tesla: they should do a partnership with BlackBerry (Could be an acquisition, taking a stake, or simply offering FSD on QNX) . This would provide several benefits for Tesla. First, it would give them a quick and easy way to launch their Full Self-Driving (FSD) and other services to every original equipment manufacturer (OEM). Additionally, QNX, BlackBerry's operating system, is a POSIX-compliant platform, already deployed in several other IoT use cases, and Tesla could potentially bring their AI capabilities to other IoT devices as well
For BlackBerry, this partnership would provide an easy path to shareholder value and an easy way to tell its customers competing in the value chain to go take a hike. In short, this would be a win-win situation for both companies.
Fun Fact: Tesla lost roughly 200 billion dollar market cap this year, and maybe for one tenth of that, they could overnight be the single largest and powerful player in Software Defined Vehicles, with an acquisition. FTC approval for it, totally different story.
