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Was Mobileye’s IPO a success?

December 23, 2022 9:00 pm
Published by: Lucien Paulemil

We've heard some fascinating stories about how an initial public offering (IPO) can help a company grow. For example, Alibaba's IPO raised $25 billion for the company! That said, things don't always go as planned.

Mobileye, a pioneer in self-driving technology, has recently gone public. Is Mobileye's IPO a success, then? Continue reading to find out!

Is Mobileye's IPO a Success?

Let's just say that things weren't going well for Mobileye's IPO, but things are starting to turn around. The Israeli company was founded in 1999 and was purchased by Intel for $15.3 billion in 2017.

Before going public again, Mobileye was facing a few challenges. For one thing, Intel was dealing with severe chip shortages, which caused product delays.

Faced with such pressure, Intel made some critical decisions, including listing Mobileye on the Nasdaq stock exchange in 2022.

The primary goal of Mobileye's IPO was to raise funds to build more chip factories. That was in the hopes of surviving in a competitive market dominated by chipmaker behemoths like Nvidia and Qualcomm. Of course, all while Intel maintained complete control over Mobileye.

Intel owns over 750 million shares of Mobileye's Class B stock. In other words, Intel retains more than 99% voting control.

Mobileye shares began trading on October 26, with Intel expecting a market valuation of $50 billion. Nonetheless, the results fell far short of their expectations.

When Intel released its earnings reports after Mobileye went public, analysts predicted a 15% drop in revenue and an 81% decline in earnings year-on-year. In fact, Mobileye's more likely market valuation became $15.9 billion.

On the bright side, on December 7, Mobileye surpassed revenue and earnings estimates in its first quarterly report since going public. To be more specific, analysts expected revenue of $447 million, but Mobileye's total revenue increased 38% to $450 million.

The company's shares have increased by 2% as a result of this revenue uplift and are currently selling at $31 in premarket trading.

Should I Buy Mobileye Stock?

With the world moving toward a more autonomous future and Mobileye's current figures, investing in this company could be profitable. Mobileye's net worth increased by 61.61% on October 26, 2022, rising from $16.72 billion to $27.02 billion. 

Not to mention that the company's losses have been decreasing gradually over the years. To give you a sense of scale, Mobileye reported a net loss of $75 million in 2021, compared to $196 million in 2020 and $328 million in 2019.

Without a doubt, Mobileye's offerings are quite valuable to the market. This company creates hardware and software to enable various vehicle driver-assistance systems. Its first product, the EyeQ system-on-chip, was released in 2007.

Its main idea was to use sensors and cameras to prevent vehicle collisions. Needless to say, that was their entry point into revolutionizing driver assistance technologies.

With seven generations of EyeQ chips developed and more than 30 vehicle manufacturers are opting for them, this product alone accounts for most of Mobileye's revenue. BMW, Volkswagen, and Nissan are the major automakers using this chip.

On top of that, Mobileye offers other brilliant technologies, such as True Redundancy and Road Experience Management

We couldn't leave out their Robotaxi innovation, which is a fully autonomous vehicle primarily designed for delivery and taxi services. Interestingly, it was recently tested on American roads!

Warping Up

So, is Mobileye's IPO a success? Things were a little rocky at first, but with the new stats, we can see a comeback underway.

Things should only get better from here for a company with multiple advanced technologies and a clear vision for the future. However, whether you should invest in it is entirely dependent on your investment objectives and risk profile.

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The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.

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