A new player is set to enter the self-driving car sector today. Half a decade after being acquired by Intel, Mobileye (MBLY) priced its initial public offering (IPO) yesterday, with trading on the firm’s shares beginning today on the Nasdaq (US-TECH 100). Let’s take a closer look at one of this year’s most interesting IPOs:
From the Middle East to Manhattan
Mobileye was originally founded in Jerusalem in 1999 and made a name for itself in the field of advanced technology related to automated driving throughout the first two decades of this century. The firm has been developing chips used in a variety of cars focused on improving driver safety for years. Mobileye’s technological advances are based in academic research, and the firm’s first research centre was opened in 2004. Driver assistance technology developed by Mobileye is already used in over one hundred different car models, enhancing safety features on in-vehicle cameras.
Fifteen years after its foundation, Mobileye went public in 2014, raising nearly $900 million and becoming the largest Israeli IPO in American stock market history up to that point. However, amid a flurry of excitement regarding the potential swift new advances in automated driving technology that seemed to grip the markets, Intel (INTC) acquired Mobileye for over $15 billion in cash in 2017, taking the company back into the private sector. (Source:Wikipedia)
Proceeding with Caution
Mobileye’s top executives have bucked the trend of excessive optimism regarding technological advances in the autonomous driving sphere in recent years. While representatives of firms from Tesla (TSLA) to NVIDIA (NVDA) have held onto the hope that fully autonomous vehicles would become a reality on streets and highways across the world sooner rather than later, Mobileye CEO Amnon Shashua has taken a different approach.
Mobileye’s technology is focused on two different tracks: advanced driver-assistance systems (ADAS), and advances that are focused on developing completely autonomous vehicles. With regard to the first, according to some estimates, Mobileye has already cornered the market, with 80% of the ADAS systems used in over 100 million cars being sourced from the company. However, according to Shashua, the technology needed to bring the latter track to fruition is still beyond the horizon. (Source:Market Watch)
Wall Street Premiere
2022 so far has not been the best of years for initial public offerings on Wall Street, with general performance being the worst since 2008 when the global financial crisis was in full swing. Over the course of last year, $155 billion was raised on American stock markets via IPOs; in the first half of 2022, the equivalent figure is a mere $4 billion. The fierce economic headwinds faced by industrialised economies across the globe have left their mark on technology companies in particular, and Mobileye has not been spared. (Source:CNBC)
According to some market experts, Intel execs had hoped for a market valuation as high as $50 billion at the time of acquisition, an estimate that dropped by forty percent over the past year. Yesterday’s IPO brought Mobileye’s total valuation to $16.7 billion, more than a billion more than the price for which Intel acquired the firm in 2017, but a number that still shows the effects this year’s market volatility has had on the U.S. tech industry.
41 million shares of Mobileye will hit the markets today, expected to bring over $860 million to Intel’s coffers. With major financial institutions such as Goldman Sachs (GS) and Morgan Stanley (MS) maintaining access to millions of additional shares, Mobileye could end up having a blockbuster IPO of over $1 billion, bringing some shine to a year that’s generally been lacklustre for companies going public. With stiff competition in the sector from firms like Tesla, Apple (AAPL), and Sony (SONY), Mobileye’s leaders have their work cut out for them following their re-entry to public trading. How the action on the trading floor will play out in the end, and what this means for a beleaguered U.S. tech industry as a whole, remains to be seen.