Netlist, Inc. (OTCMKTS: NLST) is screaming for the top in market this morning, but with no press releases or SEC filings, many are wondering what’s going on. The retail investing community is buzzing on social media about multiple upcoming catalysts that could send the stock flying.
Here’s what’s happening:
Skip to What You Want to Read
- What Is Netlist?
- Several Catalysts on the Horizons
- What Analysts Think About NLST Stock
- Risks to Consider Before Buying NLST Stock
- Final Thoughts
What Is Netlist?
Netlist is a tech company that’s focused on memory and storage. The company has several products on the books, but the real value seems to be in the company’s intellectual property.
Recently, NLST has experienced several sources of validation for the strength of its intellectual property, which those on social media believe will generate significant settlements in the near term, and revenue from licensing agreements in the long term.
The big story here however, seems to be the catalysts investors are looking forward to.
Several Catalysts on the Horizons
On social media, the retail investing community is pointing to several catalysts coming for NLST and its shareholders.
At the end of the day, Netlist is working hard to protect its intellectual property. The two biggest points of litigation for the company are Google and SK Hynix, both of which investors believe will end up paying massive settlements.
Moreover, if you don’t think NLST is big enough to fight with big players in tech, you’re sorely mistaken. In fact, the 912 patent held by the company was fully validated and reissued last month with 78 claims upheld against Google.
So, it’s clear that Google will be working out a settlement deal, which many on social media believe will be announced within the next week.
Importantly, this patent validation is likely a catalyst on its own for NLST. As a result of the fact that the patent was fully validated through the Federal Appeals court means that the company can look forward to licensing and royalty deals, which will ultimately drive significant revenues.
At the same time, Google and SK Hynix aren’t the only topics of conversation here. In fact, the CEO of the company recently said that it was actively engaged with other infringers on licensing through potential litigation. As a result, the Google and SK Hynix settlements that are likely coming down the line very soon may just be the beginning.
There’s also quite a bit of talk about the CXL Hybridimm product. In a recent statement, the CEO of the company pointed to talks with potential partners, stating that a partner would be a major strategic customer for the product that would come in as a potential investor to partner on the technology. So, there’s yet another catalyst on the horizon.
At the same time, NLST pointed to the fact that it has made new inroads with military and emerging edge customers. So, those watching the stock should be on the lookout for announcements having to do with new customer acquisition.
If that’s not enough by way of catalysts on the horizon, Netlist doesn’t intend to let you down. In fact, in the next few months, the company is expecting to launch its fourth generation SSDs, yet another major announcement to look forward to.
All told, between patent infringement litigation, licensing deals that are likely on the horizon, product partnerships, product launches, and potential military customer announcements, well, if you’re not paying attention to this one yet, you may just miss the boat!
What Analysts Think About NLST Stock
At the moment, there are two analysts covering Netlist stock. One of the analysts rates it a Buy, with the other rating it a Hold. Price targets on the stock range from $1 per share to $1.50 per share, with a median of $1.25 per share.
However, it’s important to keep in mind that in most cases, including the case of NLST, analyst opinions are outdated. With these opinions being outdated, they don’t take into account the recent win over Google, nor much of what has been mentioned above. So, upon review, I’m expecting that price targets will be increased.
Risks to Consider Before Buying NLST Stock
If you’re thinking about buying NLST stock, it’s important that you consider the risks. After all, any stock you buy will come with the risk of loss. Some of the most significant risks to consider include:
- OTC. Netlist is not a major-exchange listed company. Instead, it’s a penny stock trading on over-the-counter exchanges. This means that there’s less regulatory oversight and the potential for unsavory activities that could send the stock tumbling.
- Speculation. NLST stock is a very speculative play. The company has validated its patents, and settlements and licensing agreements are expected. However, expectations and reality may be two very different things.
- Volatility. Finally, NLST is known to generate quite a bit of volatility. Ultimately, high levels of volatility make entrance and exit decisions difficult to time while opening the door to potentially significant losses over a very short period of time.
Sure, there are risks to consider, as is the case with any other stock, but Netlist seems to be firing on all cylinders. The company’s intellectual property is obviously very strong, and the infringement upon this intellectual property tells us things.
First, the company is likely to benefit greatly from settlements that lead to massive payoffs, bolstering the balance sheet. Also, the company can look forward to licensing deals as these infringers will have to go about using the IP in the right ways in the future, helping to create substantial long-term revenues.
At the same time, with partnerships, client acquisitions, and product launches on the horizon, there aren’t many more catalysts that investors could hope for ahead. All in all, NLST stock is one to watch closely.