Netlist (NLST) Stock: Don’t Say We Didn’t Warn You


Netlist NLST Stock News

Netlist, Inc. (NASDAQ: NLST) has been on the rise for the past couple of sessions. That is, until yesterday when we published this article explaining that the stock was headed for declines. Shortly after publishing the article, the stock went on the downtrend and the declines are continuing today. Below, we’ll talk about:

  • Why NLST climbed for a couple of sessions;
  • why the stock is not likely to head back up any time soon;
  • what we’re seeing from the stock in the market today; and
  • what we’ll be watching for ahead.

Why NLST Climbed

The recent gains seen on Netlist came as the result of news surrounding a patent infringement case. The company announced last week that an ITC administrative law judge issued a claim construction order in favor of NLST. The news led to a bullish run that sent the stock gaining in multiples.

Why The Stock Isn’t Likely To Head Back Up

At the end of the day, the gains seen on NLST as of late were largely unwarranted. Sure, the patent case is going in favor of the company. However, international patent infringement litigation can take years, and the company doesn’t have that kind of time.

Looking into the company’s most recent earnings report, it becomes clear that at best, Netlist has enough cash to make it through the next six months or so. At the end of the day, the company is struggling. Sure, it’s OK for a struggling company to get a boost from good news, but gaining in multiples didn’t make sense. At the end of the day, we believe that NLST has plenty of room left to fall based on a review of their financial standing and overall business.

Put it this way, a weak business can have a good day on good news, but that doesn’t mean it’s not a weak business anymore. The reality is that the patent news was great, but it’s not enough to pull the company out of the hole it is in.

What We’re Seeing From The Stock 

As we predicted, Netlist isn’t having the best of days in the market today. After a couple days of monumental gains, the company started seeing declines yesterday and those declines are continuing in the pre-market this morning. As is normally the case, our partners at Trade Ideas were the first to alert us to the movement. At the moment (8:13), NLST is trading at $0.56 per share after a loss of $0.085 per share or 13.18% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on NLST. In particular, we’re interested in following the patent infringement case as well as what the company does to pull itself out of the financial hole it is in. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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  1. In reality when these sorts of cases are at this stage they are almost always settled very quickly before ITC makes a final ruling. LAst time SK Hynix lost a case like this they settled quickly with a licensing agreement of $240 million over 3 years. ANy sort of edge in the chip buisiness is worth billions even if for just 6 months. I expect NLST will be bought out very soon or sign a lot of agreements for use of their patents.


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