What Happened:

Shares of RFID manufacturer Impinj (NASDAQ:PI) jumped 13.6% in the morning session after the company announced the successful settlement of its patent disputes with NXP Semiconductors as both companies entered a new Settlement and Patent Cross-License agreement. According to the agreement, all ongoing legal actions will be terminated, and both parties will release each other from any patent infringement claims prior to March 31, 2024. In addition, NXP will provide Impinj with a one-time payment of $45.0 million within five business days of the execution of the agreement, along with annual license fee payments starting from April 1, 2024, initially set at $15.0 million and increasing annually. The agreement will remain valid until the expiration of certain Impinj patents, lasting approximately ten years.

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What is the market telling us:

Impinj's shares are quite volatile and over the last year have had 28 moves greater than 5%. But moves this big are very rare even for Impinj and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 11 months ago, when the stock dropped 28.5% on the news that the company reported first-quarter revenue that narrowly beat analysts' forecasts, but its earnings per share came in below expectations. In addition, sales and earnings per share guidance for the next quarter fell short of the consensus estimates. 

Stocks generally react negatively to weak earnings performance and guidance, so this quarter's earnings should result in downward revisions in financial projections for the company.

Impinj is up 47.2% since the beginning of the year, but at $126.78 per share it is still trading 10.3% below its 52-week high of $141.40 from April 2023. Investors who bought $1,000 worth of Impinj's shares 5 years ago would now be looking at an investment worth $6,925.

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