This morning one analyst published a quick report suggesting that BBM could be worth $5 per share in BlackBerry’s valuation. Considering the stock trades at just over $11 as I write this, and considering that I don’t think the stock incorporates any value for BBM in the price, it’s decent upside potential.

In his research note, Gus Papageorgiou from Scotiabank suggests that BlackBerry may be able to grow its user base from the current 60 million to 250 million within a year. His logic is simple enough. WhatsApp claims to have 250 million active users, and they are now a paid application. BBM, on the other hand, will be completely free and have more compelling features.

WhatsApp claims to have 250 million active users, and they are now a paid application. BBM, on the other hand, will be completely free and have more compelling features

Papageorgiou thinks BlackBerry should be able to monetize the user base through ads just as Twitter does, and presumably just as Facebook does (and Instagram will). He suggests BlackBerry could bring in $300 million per year, which honestly doesn’t grab me as much of a stretch since it would be just over $1 per person per year.

At $300 million per year in advertising revenue, Scotiabank calculates this would contribute about $0.42 in earnings per share (EPS) and be worth $5 per share (that’s about 12x earnings).

In July I wrote about the potential value of BBM. Based on valuations of other social networks I suggested that if BBM can reclaim its throne and be the king of mobile IM, with 200 million users, it’s possible the network could be worth $10 billion. Papageourgiou’s numbers are far more conservative than  mine, implying a value of only $2.7 billion. This is because he’s looking to quantify what I will call “real world business value”, i.e. value that comes from revenue and cash flow. I was doing a rough calculation of what BBM could be worth based upon other leading social network valuations (and acquisition prices).

Either way, it’s very clear that BBM won’t ever come close to these valuation numbers unless it grows its user base very significantly in the next year. And to do this they need to get the iOS and Android versions out there. The company has officially confirmed that the iOS version was submitted for approval two weeks ago, and the Android version doesn’t require approval. So I guess they’re waiting for Apple’s approval in order to be able to hit the stage with a big bang, and announce availability on both platforms at once.

I hope they’re putting some serious marketing dollars behind this launch. This is something WhatsApp likely can’t afford to do, given their private company status. BlackBerry has a balance sheet to support a big launch.

I hope they’re putting some serious marketing dollars behind this launch

When the iOS and Android versions launch, it’s clear that their UI will be very much like the BlackBerry 10 experience as opposed to making the app look and feel like other iOS or Android apps. I’m not sure if this will help or hurt. I’ve heard people argue it both ways. I like the BB10 UI, but if I was an iPhone owner I think I’d prefer they fit the user interface that I would be used to in iOS. But I can also see why BlackBerry wants people to get comfortable with their in-house UI, making the switch to BlackBerry feel natural should customers consider switching.

As a reminder, Papageourgiou is not the only analyst bullish on BlackBerry because of the multi-platform BBM project. Ed Zabitsky of ACI Research slapped a $20 target price on the company earlier in July, and despite his bearishness on BlackBerry 10, the upgrade and lofty target were entirely due to the possibilities of BBM on the other platforms.

As for me?  I’m still 100% convinced that somebody is going to dominate over the top (OTT) communication. Skype isn’t ideal on mobile devices. Voxer only does voice. WhatsApp is big, but mainly a text chat app. BlackBerry Messenger does everything I want (except push to talk), and is moving cross platform. If it can gain a big base of users, I think it has a real chance of dominating OTT communication on mobile. That’s a battle worth fighting like hell to win.