Should You Buy the Mobileye Self-Driving Car IPO Kiplinger Kiplinger is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Here's why you can trust us.

Should You Buy the Mobileye Self-Driving Car IPO

Mobileye filed for an IPO in late September, and shares of the Intel-owned firm are expected to start trading on Wednesday, Oct. 26. (opens in new tab) (opens in new tab) (opens in new tab) Newsletter sign up Newsletter (Image credit: Getty Images) By Will Ashworth last updated 24 October 2022 It's been several since Intel (INTC (opens in new tab), $27.70) subsidiary Mobileye filed an S-1 registration statement with the Securities and Exchange Commission (SEC). Details around the public offering for the company, which makes processors for self-driving cars, are finally emerging. MBLY stock is expected to be priced between $18 and $20 per share, and is set to start trading on the Nasdaq this Wednesday, Oct. 26.

Tesla Deliveries Miss Estimates. Is the EV Market at Risk? The question is whether investors should care about Mobileye's initial public offering (IPO)? Or is this simply another IPO that will make lawyers, accountants, and investment bankers money, but very few others? There are two reasons why investors ought to care about the Mobileye IPO.

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Intel Wants to Unlock Value for Shareholders

Intel first announced its plans for Mobileye last December, stating it would maintain majority ownership of the market leader in self-driving car solutions. "Intel's acquisition of Mobileye has been a great success," said Intel CEO Pat Gelsinger. "Mobileye has achieved record revenue year-over-year with 2021 gains expected to be more than 40 percent higher than 2020, highlighting the powerful benefits to both companies of our ongoing partnership. Amnon [Shashua, the CEO of Mobileye] and I determined that an IPO provides the best opportunity to build on Mobileye's track record for innovation and unlock value for shareholders."

10 Metaverse Stocks for the Future of Technology Intel paid $14.5 billion, net of cash, for 97.3% of Mobileye on Aug. 21, 2017. It would acquire the remaining stock valued at $375 million later that year. When all was said and done, INTC paid approximately $15 billion for a company that generated revenue of $698 million in 2018, the Israeli-based business's first full year under Intel ownership. So, the semiconductor giant paid more than 21x sales for Mobileye's innovative EyeQ System-on-Chips (SoCs) advanced driver assistance systems (ADAS). Since the acquisition, Mobileye's revenues have grown to $854 million for the six months ended July 2, 2022 – up 21% over the year-ago period. However, it lost $36 million in these six months from operations. Over the past three fiscal years, its combined operating losses were $356 million. If you annualize Mobileye's revenues so far in 2022, and then multiply that ($1.7 billion) by 21, the multiple Intel paid, you get a valuation of nearly $36 billion. This is almost 2.5 times higher than what it paid five years ago.

Kim Kardashian's $1.3 Million Crypto Fine Is a Warning to Investors The self-driving car specialist was once estimated to be worth as much as $50 billion in an IPO. However, current estimates come in around $30 billion, or 17.5x sales. Even still, one of the only ways to extract some of those gains is by spinning it off. So if you're an Intel shareholder, you should care about the Mobileye IPO.

Intel Has Other Plans

As the Financial Times recently pointed out (opens in new tab), Mobileye only accounts for 3% of Intel's revenues. Further, it does little to make the Dow Jones stock more competitive with other chipmakers such as Advanced Micro Devices (AMD (opens in new tab)) and Nvidia (NVDA (opens in new tab)). Earlier this year, Intel announced plans to invest $88 billion in Europe to balance its global semiconductor supply chain.

10 Electrifying EV Stocks Worth Watching The plan includes expanding its manufacturing capacity in Europe by building a semiconductor fab site in Magdeburg, Germany. The plant will employ 3,000 people and be operational in 2027. In addition, it will spend 12 billion Euros on expanding its Ireland manufacturing capacity. With Intel's stock down around 50% over the past 52 weeks and 35% over the past five years – the S&P 500 is up almost 45% over the same 60-month period – it has to focus on the efforts that can deliver more immediate returns than Mobileye can. Wisely, the self-driving car company will have a dual-class structure where Intel holds all Class B shares, which come with 10 votes, while Class A will have one vote. The details of how many Class B shares will be issued by Mobileye has yet to be determined, but you can be sure there will be enough to allow Intel to retain control of Mobileye until it makes sense to sell off the rest. The dual class structure might bring down Mobileye's valuation, but that's the price it must pay to ensure it doesn't entirely miss out on its future growth.

11 Stock Picks That Billionaires Love Explore More Stock Watch Intel (INTC) Will AshworthContributing Writer, Kiplinger.comWill has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding. Latest 4 Ways You Can Take Advantage of a Down Market With markets down for the year, it may seem that all the news is bad. But now could be a good time to make some profitable moves. By Adam Grealish • Published 11 November 22 New, Used or Leased: Is Now the Time to Buy an Electric Vehicle? The Inflation Reduction Act created new tax breaks for electric vehicles. Here's a guide to which EVs count and the best time to buy. By Rivan V. Stinson • Published 11 November 22 You might also like Stock Market Today: Stocks Lift Off After Encouraging Inflation Report The major market indexes rallied to their best day in two years after data showed inflation slowed in October. By Karee Venema • Published 10 November 22 Stock Market Today: Stocks Snap Win Streak as Midterm Results Roll In A continued selloff in cryptocurrencies and crypto-related stocks put pressure on the broader market today, too. By Karee Venema • Published 9 November 22 Stock Market Today: Huge Crypto Deal Shakes Up Nasdaq News that crypto exchange Binance will buy its rival sent Bitcoin and several tech stocks into a tailspin. By Karee Venema • Published 8 November 22 Stock Market Today: Stocks Rise Ahead of Midterms The Dow outperformed thanks to a major M&A-related boost for drugstore chain Walgreens Boots Alliance. By Karee Venema • Published 7 November 22 Stock Market Today: Stocks Swing Wildly After October Jobs Data The major indexes ended with their first win of the week thanks to the latest jobs report. By Karee Venema • Published 4 November 22 Kiplinger's Weekly Earnings Calendar (Nov. 7-11) stocks Check out our earnings calendar for the upcoming week. By Karee Venema • Last updated 9 November 22 Stock Market Today: Stocks Fall Again as Fed Hangover Persists The major market indexes notched a fourth straight loss as Powell's rate-hike warning kept investor sentiment in check. By Karee Venema • Published 3 November 22 Stock Market Today: Stocks Post-Fed Pop Reverses After Powell Takes the Mic It was a volatile session on Wall Street as investors parsed over the Fed's latest policy statement and Powell's presser. By Karee Venema • Published 2 November 22 View More ▸ kiplinger About Us (opens in new tab) Terms and Conditions (opens in new tab) Privacy Policy (opens in new tab) Cookie Policy (opens in new tab) Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site.
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