Assessing the Future of BlackBerry and Unity Software Investments

BlackBerry (NYSE: BB) and Unity Software (NYSE: U) were once regarded as promising technology stocks, but both have faced substantial challenges, disappointing their investors along the way. BlackBerry, previously the leading smartphone manufacturer, lost its competitive edge to Apple‘s (NASDAQ: AAPL) iPhones and Android devices. This shift led BlackBerry to cease its phone production and focus on its cybersecurity and Internet of Things (IoT) services, struggling to keep up with its more rapidly advancing competitors.

In a similar vein, Unity’s game-development engine powered around half of mobile, PC, and console games at the time of its initial public offering (IPO) in 2020. The company provided tools for monetizing games through in-app purchases and integrated ads. Unfortunately, its progress over the past four years has been hindered by Apple’s privacy updates on iOS, economic headwinds affecting advertising, and fierce competition from alternatives like Epic Games’ Unreal Engine.

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BlackBerry’s stock price has declined nearly 60% over the past four years, while Unity’s shares have plummeted more than 75%. Investors are left to consider which of these stocks has a chance for recovery.

BlackBerry Faces Diminishing Options

In response to ongoing sales declines, BlackBerry halted its phone production in 2016 to refocus on cybersecurity, IoT, and licensing. The company acquired Cylance in 2019 to bolster its cybersecurity efforts, enhanced its IoT offerings by incorporating its QNX OS into more vehicles, and mobilized its patent portfolio to generate additional licensing fees.

Despite these efforts, BlackBerry’s annual revenue fell from $1.04 billion in fiscal 2020 to $853 million in fiscal 2024, while its annual net loss only slightly improved from $152 million to $130 million.

BlackBerry’s investment in cybersecurity has not yielded expected results. It has struggled against larger, more dynamic competitors like Palo Alto Networks and CrowdStrike. Additionally, the company is grappling with challenging macroeconomic factors that are straining its cash reserves. Notably, in February, BlackBerry sold all Cylance endpoint security assets to Arctic Wolf for just $160 million, a sharp drop from the $1.4 billion it originally spent on the acquisition. Over the past three years, BlackBerry has also divested a significant portion of its patent portfolio.

Currently, BlackBerry is betting heavily on its IoT segment. It anticipates that QNX, which is now in over 255 million vehicles globally, will be the cornerstone of future sales. However, QNX faces stiff competition from other real-time operating systems such as VxWorks, FreeRTOS, and Microsoft‘s Windows Embedded.

Analysts predict that BlackBerry’s revenue will continue to decline from $853 million in fiscal 2024 to $585 million by fiscal 2027. However, there are expectations for profitability in fiscal 2026, projecting net income growth of 60% to $80 million in fiscal 2027 as the company attempts to streamline its operations. Nevertheless, with an enterprise value of $2.7 billion, BlackBerry’s shares appear pricey at roughly five times projected sales for fiscal 2027.

Stabilization at Unity Software

Between 2018 and 2023, Unity experienced a compound annual growth rate (CAGR) of 42%, with revenue climbing from $381 million to $2.19 billion. Notably, a significant portion of Unity’s growth in 2023 stemmed from its $4.4 billion all-stock merger with ironSource, completed in late 2022. However, its annual net loss escalated dramatically, increasing from $132 million to $822 million during these challenging years.

The merger aimed to revitalize Unity’s advertising business, which encountered severe difficulties following Apple’s iOS 14 update that gave users the option to disable data tracking and targeting features. This decline was further exacerbated by a wider downturn in the gaming market following its pandemic-driven boom.

To mitigate its reliance on the gaming sector, Unity acquired Peter Jackson’s Weta FX special effects studio in 2021. However, in late 2023, Unity closed Weta Digital to reduce expenses. As a result of the sluggish performance in its gaming and advertising segments, Unity’s revenue decreased by 17% to $1.8 billion in 2024, and its net loss was reduced slightly from $882 million to $664 million after further layoffs and cost-reduction measures. Former CEO John Riccitiello, who had boldly predicted substantial long-term revenue growth, resigned in late 2023.

Looking ahead to 2027, analysts project a CAGR of 6% for Unity’s revenue, potentially reaching $2.2 billion as its gaming business stabilizes and it expands its new Vector AI platform for advertising. However, with an enterprise value of $9.5 billion, Unity is only reasonably valued—trading at four times its projected sales for 2027—and is expected to remain deeply unprofitable for the foreseeable future.

The Preferred Investment: Unity Software

Neither of these stocks, given their current state, may be considered immediately appealing. However, if a choice must be made, Unity seems to be the better option. The company continues to show growth, is gradually reducing its losses, and could attract more advertisers with its AI-enhanced offerings. In contrast, BlackBerry will likely remain a poor investment until it stabilizes its financial position.

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*Stock Advisor returns as of March 24, 2025

Leo Sun holds positions in Apple. The Motley Fool has positions in and recommends Apple, CrowdStrike, Microsoft, and Unity Software. The Motley Fool recommends BlackBerry and Palo Alto Networks and has the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.