Mobileye IPO: Intel’s Self-Driving Company Is Going Public
October 07 2022 - 7:59AM
Finscreener.org
Earlier this month, it was
revealed that Mobileye, a company owned by
semiconductor giant Intel (NASDAQ:
INTC) is going public. Mobileye designs and develops
chips, maps, and software for self-driving vehicles and filed for
an IPO, according to a prospectus with the Securities and Exchange
Commission or SEC last Friday.
The SEC filing indicates MobilEye
has increased sales to $1.39 billion in 2021, from $967 million in
2020 and $879 million in 2019. In the first six months of 2022, its
revenue grew to $754 million, an increase of 21% year over
year.
Similar to most companies part of
this disruptive industry, Mobileye remains unprofitable. But, its
net losses have narrowed to $75 million from $328 million in this
period.
Can Mobileye allow Intel stock to stage a
turnaround?
Intel expects the Mobileye
listing to allow its core business to stage a turnaround. In fact,
Intel pumped in $15.3 billion to acquire MobilEye in 2017 and later
announced plans to take the company public. The acquisition was
then seen as part of a push into new market segments, and Intel
described it as “confronting ongoing stagnation in the personal
computer business that served as its cash cow for
decades.”
Intel confirmed it will use a
part of the proceeds derived from the Mobileye IPO to build
additional chip foundries as it now aims to become a manufacturing
hub for other chipmakers.
Mobileye was founded back in 1999
and has since partnered with leading automobile giants,
including General Motors (NYSE:
GM),
Ford (NYSE:
F), BMW
(OTC: BWMYY),
Audi, and Volkswagen (OTC:
VWAPY), where the former developed driving and safety features
like driver assist and lane-keeping, leveraging the functionalities
of the EyeQ camera and software.
In the SEC filing, Mobileye
claimed that 50 companies use its proprietary technology in more
than 800 vehicle models. While the filing states Mobileye is
planning to list Class A common stock, the number of shares or the
price range for the offering is yet to be
disclosed.
Intel will continue to have
control over Mobileye’s board and executive decisions as the
semiconductor giant will maintain ownership of Class B shares that
have 10x the votes of Class A shares.
Will the Mobileye IPO be successful?
Last December, Intel stated it
plans to launch an IPO for Mobileye at a valuation of more than $50
billion. So, in case Mobileye’s sales surge to $1.5 billion in
2022, the stock will be valued at 33.3x forward sales, which is
quite steep. In fact, a prior document filed with the SEC in Q1 of
2022 also mentioned the $50 billion valuation.
But the equity markets have
experienced a massive sell-off this year. As inflation has surged
to 40-year highs, central banks are willing to risk the possibility
of a recession by raising interest rates significantly in the last
three quarters. The ongoing war between Russia and Ukraine has
further strained supply chain constraints globally, making the
sky-high valuation an unlikely proposition.
Intel now expects to be chasing a
valuation of $30 billion for Mobileye, which is 40% lower than its
estimates in the last year. Even with a lower valuation, the
forward price-to-sales multiple is still steep at
20x.
The investor appetite for growth
stocks has slowed significantly, given the challenging
macroeconomic conditions. There is a good chance for Mobileye stock
to experience a sell-off in the initial days as a publicly listed
company.
How much did Intel spend on Mobileye?
Intel spent over $15 billion to
acquire Mobileye in 2017.
Is Mobileye going public?
Yes, Mobileye has filed for an
IPO as per documents submitted to the SEC.
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