Neonode Stock Craters 77% as Samsung Settlement Disappoints Investors
An anticipated $15-20 million windfall from a patent lawsuit falls dramatically short of market expectations, triggering a massive pre-market sell-off.
Shares of Neonode Inc. (NASDAQ: NEON) plummeted in spectacular fashion Thursday, cratering nearly 77% in pre-market trading after the company revealed a much smaller-than-anticipated windfall from a patent settlement involving Samsung. The catastrophic stock collapse demonstrates a classic case of market expectations far outpacing reality.
The optical technology company in net proceeds. The payment stems from a patent infringement lawsuit settled between Samsung Electronics and Aequitas Smartphone LLC. Although not a direct party in the suit, Neonode was entitled to 50% of the net proceeds after it .
While a multi-million dollar infusion would typically be welcome news, investors reacted with brutal disappointment. The stock, which had closed at $21.52, , wiping out a significant portion of its market capitalization. The violent sell-off suggests that speculators and investors had priced in a substantially larger settlement, with the final figure being a significant letdown.
The company noted the final amount is after deductions for brokerage fees, legal costs, and taxes. Neonode's Board of Directors has not yet decided on how the settlement funds will be utilized.
Attention now turns to Neonode's remaining legal prospects. A separate patent infringement litigation, also brought by Aequitas against tech giant Apple Inc., remains pending in the Northern District of California. Investors will be watching that case closely, though perhaps with more tempered expectations following the Samsung outcome.