Neonode Inc

Research note


Neonode: The CEO steps down

Neonode today, Tuesday, announced that the CEO, Thomas Eriksson, will step down. Andreas Bunge, member of the Board of Directors, will assume the position as interim CEO from January 1. Eriksson will remain on the Board of Directors.

We have not yet talked to someone in the company, meaning our knowledge on the matter at the moment is rather limited. We find it positive that Eriksson will remain a part of Neonode, focusing on R&D, innovation, and business development. These are likely Eriksson's major concerns given his passion for technology. Eriksson is the co-founder of Neonode, an inventor and father of the zForce technology. We believe that in general it is very rare that such entrepreneurs remain CEOs throughout a company's lifetime so in that sense today's news are not a total surprise.

Our Redeye Rating is unchanged for now and at the moment we do not intend to make any revisions. The stock market seems to applaud the decision though as shares, at the moment, are up 7 percent. This reaction is likely mostly related to the shares' poor performance during the past year. 

Yesterday a non-German, European, premium car OEM (likely Volvo or JLR) sourced design wins for eye tracking software for 13 different car models. We see this as an important driver for semi-autnomous cars and consequently steering wheel orders for Neonode. Steering wheels for one single car model with 100 000 units annually would according to our estimates imply an order value of at least USD 3-5 million per year. Thus, a few steering wheel orders should be able to close the gap between the current share price and our base case of USD 1.7 per share. We find it likely that Autoliv, given its huge steering wheel market share, should be able to win at least one zForce steering wheel order for a level 3 car model.

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