Neonode (NEON) AI Stock Analysis

• Market Cap: $24.17M
• Dividend Yield: N/A
• Average Volume (3M): 1.44M
• Price to Earnings (P/E): 3.4
• Beta (1Y): 1.72
• Revenue Growth: -48.54%
• EPS Growth: N/A
• Country: US
• Employees: 40
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): -0.12
• Shares Outstanding: 16,782,923
• 10 Day Avg. Volume: 497,098
• 30 Day Avg. Volume: 1,436,721
• PEG Ratio: -0.02
• Price to Book (P/B): 1.18
• Price to Sales (P/S): 14.16
• P/FCF Ratio: -2.82
• Enterprise Value/Market Cap: -0.06
• Enterprise Value/Revenue: -0.72
• Enterprise Value/Gross Profit: -0.73
• Enterprise Value/Ebitda: -0.20
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): -0.38
• Revenue Forecast (FY): $3.49M

• Rating: 52 Neutral
• Price Target: $1.50 ▼(-21.05% Downside)
• Action: Reiterated Date: 03/19/26
• Date: Action: Reiterated 03/19/26

The score is driven primarily by mixed financial performance—strong balance sheet and a 2025 profitability rebound, offset by ongoing revenue contraction and consistently negative cash flow. Technicals are notably weak with a clear downtrend, while valuation looks cheap on P/E but is tempered by cash burn risk.

Positive Factors

Strong balance sheet / low leverage

Neonode's very low debt relative to equity provides durable financial flexibility, reducing solvency risk and enabling funding of R&D or NRE without reliance on external debt. This limited leverage helps the company withstand cyclical revenue weakness and supports strategic investments over months.

Profitability rebound and high gross margin

The 2025 earnings inflection to positive net income and persistently high gross margins indicate the underlying licensing and product economics can be highly profitable when revenue scales. This demonstrates the business can convert sales to earnings efficiently, a durable strength if top-line stabilizes.

Licensing-based business model

A licensing and royalty model provides structural advantages: asset-light revenue, high incremental margins, and upside from customer volume. Embedded IP licensing can create long-term annuity-like streams and leverage R&D, supporting sustained profitability if customer adoption continues.

Negative Factors

Persistent revenue contraction

Multi-year revenue decline (large negative growth) signals structural demand or market-share challenges that limit the upside of high margins. Without sustained top-line recovery, fixed costs and scale advantages are muted, making earnings and investment plans vulnerable over the 2–6 month horizon and beyond.

Weak operating and free cash flow

Consistent negative operating and free cash flow means the company is consuming cash despite a profit inflection, constraining reinvestment and forcing reliance on the balance sheet or external financing. Persistent cash burn raises sustainability risk if cash generation doesn't improve.

Earnings volatility and litigation dependency

Reliance on sporadic IP enforcement, settlements, or litigation-driven revenues makes reported earnings lumpy and hard to forecast. This structural unpredictability undermines revenue quality and planning, limiting confidence in recurring earnings and complicating longer-term strategic commitments.

Neonode Business Overview & Revenue Model

Company Description

Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, China, and internationally. It also offers software solutions for scene analysis using advanced machine learning algorithms to detect and track persons and objects in video streams for cameras and other types of imagers. In addition, the company licenses its technology to original equipment manufacturers (OEMs) and Tier 1 suppliers. Further, it provides embedded sensors modules to OEMs, original design manufacturers, and systems integrators; and engineering consulting services. Additionally, the company sells Neonode branded sensor products, such as AirBar products through distributors. It serves office equipment, automotive, industrial automation, medical, military, and avionics markets. Neonode Inc. was incorporated in 1997 and is headquartered in Stockholm, Sweden.

How the Company Makes Money

Neonode primarily makes money through (1) licensing its technology and intellectual property (IP) to other companies and (2) services/engineering support related to integrating its technology into customer products. Historically, this model has included per-unit royalties or license fees tied to customer shipments of products incorporating Neonode technology, as well as potential upfront fees for development, customization, or non-recurring engineering work. In addition, the company’s earnings have been significantly influenced at times by IP enforcement and litigation-related outcomes (e.g., settlements or court awards), which can create material but non-recurring revenue. Specific current major customers, partnership terms, royalty rates, and revenue concentration details are null.

Neonode Financial Statement Overview

Summary

Mixed fundamentals: profitability rebounded sharply in 2025 and the balance sheet is strong with very low leverage, but revenue continues to shrink and operating/free cash flow remain persistently negative, raising questions about earnings durability.

Income Statement

Profitability rebounded sharply in 2025 (annual) with net income turning strongly positive after multiple loss-making years, and gross margin remains exceptionally high. However, revenue has been shrinking for several years and fell again in 2025, pointing to ongoing demand/scale challenges. Overall, the income statement shows a meaningful earnings inflection but still lacks consistent top-line momentum.

Balance Sheet

The balance sheet is a clear strength: debt is very low relative to equity across periods, and equity remains sizable versus total assets, indicating limited leverage risk. Return on equity improved dramatically in 2025 (annual) after being negative in prior years, reinforcing the recent profitability turnaround. The main watch item is that performance has been volatile historically, but financial flexibility appears strong given the light debt load.

Cash Flow

Cash generation is weak: operating cash flow and free cash flow are negative across all years shown, including a larger cash outflow in 2025 (annual) versus 2024. While free cash flow growth improved in 2025 (annual), the company is still consuming cash rather than producing it, which raises sustainability risk if negative cash flow persists.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.06M	3.11M	3.83M	5.67M	5.84M
Gross Profit	2.04M	2.99M	3.82M	4.87M	4.88M
EBITDA	-7.74M	-6.41M	-5.58M	-4.77M	-5.97M
Net Income	8.49M	-6.47M	-10.12M	-4.88M	-6.45M
Balance Sheet
Total Assets	26.89M	18.38M	19.01M	21.20M	22.99M
Cash, Cash Equivalents and Short-Term Investments	25.36M	16.43M	16.16M	14.82M	17.38M
Total Debt	371.00K	546.00K	10.00K	259.00K	865.00K
Total Liabilities	2.20M	1.94M	1.85M	1.78M	3.15M
Stockholders Equity	24.69M	16.44M	17.16M	19.42M	23.88M
Cash Flow
Free Cash Flow	-10.35M	-5.63M	-6.43M	-6.86M	-7.75M
Operating Cash Flow	-10.25M	-5.59M	-6.31M	-6.81M	-7.68M
Investing Cash Flow	19.30M	152.00K	-123.00K	-52.00K	-67.00K
Financing Cash Flow	-11.00K	5.78M	7.78M	4.51M	14.57M

Neonode Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.90
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NEON, the sentiment is Negative. The current price of 1.9 is above the 20-day moving average (MA) of 1.68, above the 50-day MA of 1.78, and below the 200-day MA of 8.76, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 31.85 is Neutral, neither overbought nor oversold. The STOCH value of 25.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NEON.

Neonode Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LGL	58 Neutral	$39.99M	11.57	2.33%	―	14.07%	153.24%
NEON	52 Neutral	$24.17M	3.44	50.99%	―	-48.54%	―
CPSH	52 Neutral	$69.99M	110.94	2.42%	―	38.22%	70.68%
MVIS	45 Neutral	$210.77M	-1.68	-137.37%	―	-67.66%	13.39%
WBX	43 Neutral	$46.61M	-0.29	-181.83%	―	-11.22%	6.15%