Electric vehicles have taken the car market by storm, with new companies like Tesla (NASDAQ: TSLA) and Lucid (NASDAQ: LCID) springing up with innovative new models. But the future of automobiles goes further than simple electric vehicles. The next step in the evolution of road travel appears to be automated vehicles.
That's where Mobileye comes in.
What is Mobileye?
Jerusalem-based business Mobileye aims to lead the mobility revolution with its autonomous-driving and driver-assist technologies by using computer vision, machine learning, mapping, and data analysis.
The company’s technology enables self-driving vehicles and mobility solutions, powers industry-leading advanced driver-assistance systems, and delivers valuable intelligence to optimize mobility infrastructure.
Mobileye says it has pioneered technologies as True Redundancy sensing, REM crowdsourced mapping, and Responsibility Sensitive Safety (RSS) technologies that are driving the advanced driver assistance systems (ADAS) and automated vehicle (AV) fields towards the future of mobility.
The company was founded in 1999 by Amnon Shashua, a professor of computer science at the Hebrew University in Jerusalem. He now also serves as senior vice president at Intel Corporation after the tech giant acquired Mobileye for around $15.3bn in 2017.
The company says that more than 40 million cars have its technology installed, adding that its products had been selected for implementation in serial production of 313 car models from 27 OEM partners by 2017.
At present, the company’s goal seems to be establishing and growing a robotaxi business of automated vehicles for ride hailing. Then, using the lessons from this venture, the company is seeking to create a consumer AV.
When Will Mobileye Stock Go Public?
There is not yet an IPO date for Mobileye stock to join the NASDAQ, but the company has reportedly confidentially filed for a public listing with the Securities Exchange Commission.
A press release announcing the filing said:
“The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions.”
Why is Mobileye Going Public?
A statement released by Intel in early February 2022 said the move to take Mobileye public would unlock the value of Mobileye for Intel shareholders by creating a separate publicly traded company and would build on the company’s successful track record and serve its expanded market.
Intel has previously that it would receive the majority of the proceeds from the share sale, with some of these funds being used to build more Intel chip plants. Additionally, it has been reported that Intel will retain a majority shareholding in Mobileye.
Intel CEO, Pat Gelsinger, commented:
“Intel’s acquisition of Mobileye has been a great success. 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. and I determined that an IPO provides the best opportunity to build on Mobileye’s track record for innovation and unlock value for shareholders.”
Mobileye Investment Risks
One clear risk is a risk associated with autonomous vehicles generally. The next generation of vehicles, or the vehicles that specifically use Mobileye technology, may not end up performing to the standards expected of them. This can often be the case with cutting edge technologies.
The results of automated vehicles not performing up to standard can be catastrophic, causing property damage, serious injuries or even death. For example, September 2020 saw an Uber self-driving vehicle run down a pedestrian who sadly died as a result of the crash.
In this case, Uber did not face criminal charges as blame was laid at the door of a negligent safety driver. However, poor performing tech could easily open a business like Mobileye up to damaging lawsuits and criminal charges, so investors need to be confident that the company has the know-how to make a safe product.
An investment risk that the company has in common with the wider chipmaking industry is that of fabless chipmakers. These are companies like Apple, which might not make their own chips but have ended up designing their own chips.
This obviously saves a good amount of money for businesses like Apple, but it takes valuable revenue from Mobileye and its ilk. If the practice becomes more widespread for AV chips it could damage Mobileye’s prospects.
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Is Mobileye a Good Investment?
First off, it’s important to note that it is difficult to fully appraise Mobileye without access to all of its financial information.
We know that Intel said in December that the company’s revenue was on course to rise by 40% in 2021 and that sales have roughly tripled since the business was acquired by Intel back in 2017. The company also reportedly achieved an operating income of more than $450m in 2021.
We also know that Mobileye has partnered up with some of the biggest names in the industry, including the likes of BMW, Ford, General Motors, Tesla and Volvo.
Major carmakers and transport companies who are currently at the cutting edge seem to think that automated vehicles are the next step in the evolution of the passenger vehicle.
They might well be right, but with competition from Amazon subsidiary Zoox, Alphabet’s Waymo business and publicly traded outfits like Aptiv, the company has its work cut out for it. A lot of different players are jostling around and trying to master automated vehicle tech.
With that being said, Mobileye has a strong backer in the form of Intel and more than 20 years of experience in the industry. The company’s tech is already in hundreds of models, while revenue is on the rise and profits are already being achieved. This looks like a great platform that could make this growth stock a savvy pick.